Shared Services & Joint Procurement Board

Monday 12 July 2010 (2pm – 4pm)

Venue: London Councils, 59 ½ Southwark Street, London SE1 (Room [2])

Members Rob Leak - Chief Executive, Enfield (Chair) Capital Ambition Programme Board Nathan Elvery – LB Croydon (Deputy Chair) SLT Jane West – LB Hammersmith & Fulham (Deputy Chair) SLT Chris Naylor – LB Tower Hamlets SLT Mimi Konigsberg – LB Hounslow ADASS Andrew Christie – LB Hammersmith & Fulham ADCS Marc Dorfman – LB Haringey ALBPO Stephen Tate - GLA GLA Sally Leigh – LB Lambeth Heads of Procurement Tot Brill – RBK&C LEDNET John O Brien – Chief Executive, London Councils London Councils Graeme Swinburne - RBKC LOTAC Mario Varela – London NHS NHS London Dean Shoesmith – LB Sutton PPMA David Wilde – Westminster SOCITM

Advisors: Steve Johnson - Capital Ambition Julia Vernalls – Capital Ambition Kevin Lloyd – Capital Ambition Ken Cole – Capital Ambition Caroline Stanger – Capital Ambition Dennis Skinner – IDEa David Warwick – Government Office for London (GOL)

In Attendance John NewhamTfL (Item 5) Christine Morton, LFEPA (Item 10) Dana Skelley, TfL (Item 5) Aramide Adeboye Capital Ambition Zerrin Lovett, OGC (Item 5) Programme Office, Capital Ambition Liz Gugliotti, Westminster (Item 6) Rachel Clark, Westminster (Item 6) Sally Leigh – Lambeth (Item 7) Amanda De Swarte, Haringey (Items 8, 9) AGENDA ITEMS

1. Apologies

Apologies for absence have been received from Jane West, LBHF; Marc Dorfman, LB Haringey; Nathan Elvery, LB Croydon; Mario Varela, London NHS; Graeme Swinburne, RBKC.

2. Minutes Of The Last Meeting

Recommendation: That the Board approves the minutes of the meeting held on 20 April 2010.

Constitutional items

3. Revised Governance Arrangements

Purpose: To note and comment on the revised governance arrangements for Capital Ambition to end March 2011, including the revised scope and title of the Board, appointment of vice chairs, and to advise on the appropriate level of project funding to be delegated to the Board.

A copy of the revised governance chart is attached as Appendix A; the current terms of reference of the Efficiency Board is attached as Appendix B; and the draft terms of reference for the Shared Services and Joint Procurement Board is attached as Appendix C.

Recommendations: The Board is asked to:

i) Note the change of name to the Shared Services and Joint Procurement Board; ii) Appoint two vice chairs for the Board; iii) Consider and comment on the revised scope and terms of reference of the Board and appropriate membership (Appendix C); and iv) Advise the CAPB on the appropriate level of delegated authority for project funding above which proposals will be referred to the CAPB for ratification (currently £250,000).

Programme Management

4. Review of Shared Services & Joint Procurement Programmes and Projects and Overall Financial Position

Purpose: To agree the findings from the review of existing projects and programmes that relate to shared services and joint procurement.

Recommendation: That the Board:

(i) considers the review of existing projects and agrees the individual project status as recommended in the report; and (ii) notes the overall Capital Ambition Financial position. WORK PROGRAMMES

5. Transforming London Highways Maintenance

Purpose: To update the Board on the outcomes of Phase 1 and to request funding of £274,090 to complete Phase 2 as described in the project Initiation document appended and which should realise at least 10% (£34m) savings per annum.

Recommendation: That the Board: (i) Notes the Outline Business Case signed off by TfL, LOTAG and OGC (ii) Recommends approval of Capital Ambition funding of £274,090 to complete the project.

6. Collaborative Procurement: Passenger Transport Services & Vehicles: (Westminster and Hammersmith & Fulham)

Purpose: To consider a request for funding of £237,875 over three years for the development and procurement in 2011 of a joint best practice and reduced cost and carbon emissions Passenger Carrier Transport service, that will align with the development of the London Council's pan-London Door-to-Door Strategy. It is anticipated that the joint procurement will achieve cashable savings of at least 5% (£285k) in the first year and will increase significantly as other councils use the new contract.

Recommendation: That the Board approves a request for funding of £237,875 over three years for the development and procurement in 2011 of a joint best practice and reduced cost and carbon emissions Passenger Carrier Transport service, initially for West London authorities but to be available to all London councils, that will align with the development of the London Council's pan-London Door-to-Door Strategy.

7. Promoting the Consultancy and Professional Services Procurement project to London authorities

Purpose: To receive the closure report for this project and make additional recommendations for the future direction of this work.

Recommendations: That the Board: i) accepts the closure report from London Borough of Lambeth; ii) considers the recommendations in paragraph 3.2 of the report; and iii) notes that a further programme of work will be developed and submitted to a future meeting of the Board. 8. **London Energy Project - Phase 3 Closure report**

**Purpose:** To receive the Phase 3 closure report and provide the Board with:

- An overview of current significant achievements and efficiency gains/savings
- An overview of key challenges for the future, including re-baselining of savings to 2009/10
- The need for continued leadership and support to embed change in boroughs and to identify further potential savings and benefits.
- A high level overview of proposed programme activities, deliverables and their benefits.

**Recommendation:** That the Board:

(i) recognises the achievements and realised benefits in the Phase 3 closure report; (ii) endorses the draft programme of work activities/benefits attached at Appendix 2 (subject to re-baselining against 09/10); and (iii) if the Board recognises the need for LEP to continue on a more permanent basis, to consider and resolve future funding and hosting options with key stakeholders appropriate as soon as possible.

9. **Carbon Reduction Commitment – Pan-London Review**

**Purpose:** This report is intended to provide the Board with:

- Sufficient evidence to authorise a Carbon Reduction Commitment peer review (Health check) service to ensure individual boroughs comply with scheme and avoid costs / inefficiencies
- Sufficient evidence to approve a Pan-London review of energy efficiency measures and opportunities assessment of further potential savings and benefits
- The need for LEP to lead in this new area and support best practice within boroughs
- Sufficient evidence to authorise project costs. This is made up from LEP keeping £27k income generated in 2009/10 from licensing the first CRC module to all RIEPs and HE sector and the Board authorising the release of an additional £20k.

**Recommendations:** That the Board:

i) Approves the retention of the £27k income generated to part-fund this project and release an additional £20k to fully cover the costs of the Health check and Pan-London review; and

ii) Promotes take-up of the Health check service through Society of London Treasurers and London Environment Directors Network. 10. Supplier Relationship Development – Benefits Realisation

**Purpose:** To consider the attached progress report on benefits realisation for the Supplier Relationship Development project as requested at the Efficiency Board meeting on 20 April 2010

**Recommendation:** That the Board notes and comments on the attached progress report on benefits realisation for the SRD project.

**Standing Items**

11. Current issues and AOB

12. Date of next meeting

The next meeting of the Shared Services & Joint Procurement Board will be held on **Tuesday 7 September 2010 from 2.30pm – 4.30pm** at London Councils, 59½ Southwark Street, London SE1 0AL.

13. Items for next meeting

**Purpose:** To note the forward plan for the meeting to be held on 7 September 2010. Efficiency Board meeting

Meeting held on Tuesday 20 April 2010 (2.30pm – 4.30pm)

Venue: London Councils, 59 ½ Southwark Street, London SE1 (Room 4)

Present: Rob Leak - Chief Executive, Enfield (Chair)\
Nathan Elvery – LB Croydon (Deputy Chair)\
Jane West – LB Hammersmith & Fulham (Deputy Chair)\
Mimi Konigsberg – LB Hounslow\
Sally Leigh – LB Lambeth\
Tot Brill – RBK&C\
Graeme Swinburne – RBKC (Items 3, 4, 13)\
Mario Varela – London NHS\
Dean Shoesmith – LB Sutton\
David Wilde – Westminster (Items 4 – 13)

Advisors: Steve Johnson - Capital Ambition\
Julia Vernalls – Capital Ambition\
Kevin Lloyd – Capital Ambition\
Ken Cole – Capital Ambition\
Caroline Stanger – Capital Ambition\
Steve Pennant – Capital Ambition\
David Warwick – Government Office for London (GOL)

In Attendance Aramide Adeboye, Capital Ambition\
Mark Pacey, Capital Ambition\
Simon Williams, LB Merton (Items 1 - 4)\
Mark Brangwyn, London Councils (Items 1 - 4)\
Jonathan Bruwer, RBKC (Items 1 – 4, 13)\
Martin Nottage, RBKC (Items 1 – 4, 13)\
Ian Winter, Department of Health (Items 1 – 5, 13)\
Ailsa Kirkland, Department of Health (Items 1 – 5, 13)\
Christine Morton, LFEPA (Items 1 - 6)\
Ian Nichols, WLA (Items 6 - 7)\
Andrew Chinneck, LB Sutton (Item 8)\
Jonathan Russell, CIPFA (Items 1 – 4,13)\
Salli Reynolds, Capital Ambition (Items 8 - 12)\
Debbie Wisdom, Westminster AGENDA ITEMS

1. Apologies

Apologies for absence have been received from Chris Naylor, Tower Hamlets; John O’Brien, London Councils; Marc Dorfman, LB Haringey; Dennis Skinner, IDeA; Stephen Tate, GLA;

2. Minutes Of The Last Meeting

Decision The Efficiency Board approved the minutes of the meeting held on 15 February 2010.

WORK PROGRAMMES

Delivering Together

3. Procurement of a Joint Back Office for Parking – RBKC and LBHF

The Efficiency Board was asked to consider a bid for further funding for the implementation of a shared parking back office to enable the Royal Borough of Kensington and Chelsea (RBKC) to provide services, initially relating to Penalty Charge Notice Processing, for the LBs of Hammersmith and Fulham (LBHF), and to advise the Capital Ambition Programme Board (CAPB) of:

i) The strength of the Business Case; ii) Robustness of financial data relating to costs and benefits; and iii) Whether or not the return on the investment requested meets the Board’s expectations.

Note: As this bid exceeded the £250,000 delegated authority limit for the Efficiency Board, the Board was asked to advise the CAPB of the appropriateness of the bid.

It was noted that the funding requested was for the worst case scenario.

The Board discussed the scope and level of borough commitment to the project that reasonable could be expected to ensure a satisfactory return on investment.

Decision: The Efficiency Board considered the request for capital and revenue funding totalling £1.6m for the creation of a shared back office service centre for the processing of Penalty Charge Notices in RBKC and LBHF and agreed to forward it to the CAPB subject to:

i) clarity on the full potential of the project i.e. potential for a pan London Back Office for Parking, located outside London; ii) Confirmation of the strength of the Business Case and cost of phasing in future tranches of authorities; iii) Signed expressions of interest from authorities wishing to commit to the project at a future stage; iv) SLT validation on the robustness of the financial data relating to costs, benefits and return on investment; and v) Whether or not the return on the investment requested meets the Board’s expectations.

The Efficiency Board noted that the SLT Efficiency sub-group would consider the item at its meeting on 17 May 2010 in time to report to the CAPB on 15 June 2010. 4. **Care Funding Calculator**

The Efficiency Board was asked to approve a funding request for the continuation of the Care Funding Calculator (CFC) Project. It was noted that £2m auditable cashable savings had been realised to date by authorities exploiting the CFC.

**Decision:** The Efficiency Board approved the funding request for £95,000 to complete Phase II of the Care Funding Calculator Project.

5. **JIP – Assistive Technology**

The Efficiency Board was asked to consider a bid for funding to enable 10 London boroughs to embed a tailored mainstreamed Assistive Technology (AT) service as part of their Adult Social Care customer pathway, achieving both quality & efficiency outcomes.

**Note:** As this bid exceeded the £250,000 delegated authority limit for the Efficiency Board and as the preferred start date is prior to the next meeting of the CAPB, the Board was asked to consider the bid and recommend approval to the Capital Ambition Operational Sub-Group if appropriate.

**Decision:** The Efficiency Board considered the request for revenue funding totalling £361,269 to enable 10 London boroughs to embed a tailored mainstreamed Assistive Technology (AT) service as part of their Adult Social Care customer pathway, and agreed to forward it to the Operational Sub Group subject to validation of the of cashable savings attributed to the Transforming Community Equipment Services project.

6. **Supplier Relationship Development**

The Efficiency Board:

- received a report on the outcomes and achievements to date of the London Fire Brigade (LFB) Supplier Relationship Development Project (SRD),
- was asked to consider a bid for further funding for Phase 4 which will embed it in projects and local authorities by:
  - expanding the scope of the Supplier Relationship Development Project (SRD) to include consultancy support to work with suppliers from additional categories;
  - continuing support for suppliers from the third phase;
  - creating an SRD Toolkit; and
  - pursuing SRD in a localised setting at London Fire Brigade.

**Decision:** The Efficiency Board noted the progress to date and approved the request for revenue funding of £215,000 in 2010/11 embed it in projects and local authorities by:

- expanding the scope of the Supplier Relationship Development Project (SRD) to include consultancy support to work with suppliers from additional categories;
- continuing support for suppliers from the third phase;
- creating an SRD Toolkit; and
- pursuing SRD in a localised setting at London Fire Brigade.

7. **WLA – Adult Social Care Efficiencies Programme – Shared Management Information System**

The Efficiency Board was asked to consider a proposal for funding from the West London Alliance (WLA) for the development of a contracting and performance Management Information System (MIS) to support the realisation of performance improvements and savings through the collaborative purchasing of residential and domiciliary care services by six authorities in West London.

The Board discussed the effects of deferral of approval for the proposal and noted that:

i) the JIP Office had been asked for comments on the proposal and those comments had been tabled (with apologies).

ii) the Chair of the JIP relayed that the JIP Board would be supportive of the programme in principle.

**Decisions:**

The Efficiency Board considered the request for revenue funding of £250,000 for Phase 1 and capital funds of £388,100 for Phase 2 of the Adult Social Care Efficiencies Programme – Shared Management Information System and:

i) referred the PID to the JIP Programme Board for comment prior to consideration by the CAPB the Programme Board on 15 June; and

ii) asked for further validation of the financial data within the PID.

8. **Sutton/Merton Joint HR**

The Efficiency Board considered a proposal from the London Boroughs of Sutton and Merton for a total of £50k revenue and £60k capital funding in the two years 2010-2012, to support the continuing development of the joint HR service through shared ICT, improved transactional processing and the development of shared competencies and capabilities.

It was noted that the IES model was used to re-organise the structure.

**Decision:**

The Efficiency Board deferred the approval request for funding from the London Boroughs of Sutton and Merton for a total of £50k revenue and £60k capital funding in the two years 2010-2012, pending:

i) Further exploration of the use of the LSPN and other applications to support data sharing;

ii) Learning and advice from the project to date being shared more widely and the potential of extending to PCTs;

iii) Preparation of rules of engagement for continuing investment in CA projects from the Director of Capital Ambition.

9. **Collaborative Postal Services Tender Exercise**

The Efficiency Board noted the current situation with the implementation of the new Postal Services contract following on from an involvement with fifteen boroughs in 2009.

**Decisions:**

The Efficiency Board:

i) approved the closure report from Talis;

ii) invited the London boroughs of Camden and Barnet with Capital Ambition to produce joint case studies for wider publication to enable other London local authorities to see what has been achieved and the lessons learned; and iii) requested the London Contracts and Supplies Group (LCSG) to look at the options for a fresh tendering exercise for London once the outcomes of the Camden / Barnet work are fully documented.

10. OEA/CRS ProClass Mapping Exercise – Outcomes and Way forward

The Efficiency Board was briefed on the outcomes from the classification and analysis of the 2008/9 influenceable third party spend across London, and was asked to approve the requested revenue funding to repeat the exercise for 2009/10 spend and embed the skills and knowledge at sub-regional level.

Decisions: The Efficiency Board: i) noted the outcomes and achievements from the 2008/9 analysis and classification; and ii) approved funding of £60k to repeat the exercise for 2009/10 spend (£50k) and embed the skills and knowledge at sub-regional level (£10k).

Connected London

11. Converged Networks for London

The Efficiency Board was asked to approve funding to support the OJEU procurement of a London wide framework for the provision and management of converged voice, data and video networked services, through which London public sector organisations can join up provision, develop shared services and realise significant cost reductions.

It was noted that this project was to be led by David Wilde, Westminster City Council.

Decisions: The Efficiency Board approved £50,000 of the £230,000 requested for capital funding to support the OJEU procurement of a London wide framework for the provision and management of converged voice, data and video networked services, for use by London public sector organisations subject to: i) the governance of the project being broadened to include – • the GLA CIO group; • NHS London; • the London Grid for Learning; and ii) A principle of the project being to provide Capital Ambition partners with better choice of network providers without increasing prices to other partners such as schools. iii) Further consideration would be given to the remainder of the funding requested following completion of the above actions.

Raising the Bar

12. Agency EKE

The Efficiency Board was advised of the closure of the project, “Temporary, Agency and Interim Staff: delivering efficiency savings through procurement”, led by London Borough of Havering; and noted the next steps. Decisions: The Efficiency Board: i) noted and accepted the closure report from London Borough of Havering; and ii) noted that a further programme of work will be developed and submitted to a future meeting of the Board.

Programme Management

13. CIPFA Efficiency Review

The Efficiency Board was updated on progress to date on the work commissioned from CIPFA in January 2010 to: • review Capital Ambition’s investment in efficiency projects (12 new projects and update on previous 17 examined from the last review commissioned in September 2009); and • develop a benefits realisation tracking tool to understand and monitor the level of cashable savings for each project.

Decisions: The Efficiency Board: i) considered the executive summary and benefits realisation tracking tool from CIPFA on the review of cashable savings and non-cashable efficiency gains arising from its investment in efficiency projects; ii) asked the Director to write to all key project managers, project sponsors and Chief Executive outlining the main findings and the action necessary to bring the projects up to the standard required to enable Capital Ambition to calculate and report authoritatively to its key stakeholders, including DCLG; and iii) asked the Director for a further report on how Capital Ambition planned to validate the financial implications of business cases and PID's in the future.

14. Progress and Budget Update for Efficiency Related Projects

Decision: The Efficiency Board noted the report on the status, progress and financial standing of Capital Ambition projects and activities with an efficiency focus that report to the Efficiency Board and commented that the report was well written.

Standing Items

15. Current issues and AOB

It was noted that: a) there had been ten bids submitted to Capital Ambition for Capital funding and that the deadline for receipt of requests had been extended to 30 April 2010. Guidance was sought from SLT representatives to validate the assessment criteria and ROI figures; b) The Charter Board was to meet on the 13 May 2010 to consider the signature projects from the Board’s work programme under the heading of likely to ‘achieve more from less public spend’. The Chair asked for any Board member comments or suggestions to be sent to Steve Johnson, the deadline for completion is 30 April 2010. c) The date of the next Efficiency Board meeting clashes with the LGA 2010 conference in July and that an alternative date would be sought. 16. Date of next meeting

The next meeting of the Efficiency Board will be held on **Monday 12 July 2010, from 2pm – 4pm** at London Councils, 59½ Southwark Street, London SE1 0AL.

17. Items for next meeting

To include:

- **Outline Strategic Framework Model for Pan London Construction**: To report back on the establishment of an agreed model for construction for London
- **Environmental supply chain assessment** – Progress report
- **Consultancy EKE** – Closure report
- **London Efficiency Challenge: Promotion of good practice** – to report on how Capital Ambition promotes good practice emerging from LEC
- **LEP Closure report phase 2** – to provide the Board with a closure report (closing May 10) | Item Number | Description | Action owner | Action due date | Progress | |-------------|------------------------------------------------------------------------------|-----------------------|-----------------|--------------------------------------------------------------------------| | 3. | Procurement of a Joint Back Office for Parking – RBKC and LBHF | Jane West, Graeme Swinburne | 17/05/10, 15/06/10 | Pending RBKC and LBHF submitting signed expression of interest from authorities wishing to commit to the project at a future stage | | | • SLT members are asked to validate the robustness of financial data relating to costs and benefits. | | | | | | • See minutes. | | | | | 5. | JIP – Assistive Technology | Steve Johnson/Ian Winter | Prior to CAPB on 15/06/10 | Completed | | | The Board asked that Capital Ambition validates the cashable savings attributed to TCES. | | | | | 7. | WLA – Adult Social Care Efficiencies Programme – Shared Management Information System | Mimi Konigsberge, Ian Nichols (WLA) | 15/06/10, 15/06/10 | Completed, Completed | | | • The Board asked that JIP Programme Board comment on the programme proposal prior to the next CAPB on Board on 15 June. | | | | | | • Further validation of the finance data and decision making process. | | | | | 8. | Sutton/Merton Joint HR | Dean Shoesmith, Steve Johnson | 12/07/10, 12/07/10 | Pending completion of work by LB Sutton/Merton | | | • See minutes. | | | | | | • Preparation of rules of engagement for continuing investment in CA projects from the Director of Capital Ambition. | | | | | 9. | Collaborative Postal Services Tender Exercise | Ken Cole | 12/07/10 | Pending | | | See minutes. | | | | | | **Converged Networks for London**\
  | | • The Board asked for the governance of the project to be broadened (see minutes) | David Wilde | 12/07/2010 | Completed | | | **Agency EKE**\
  | | A programme of work is developed and submitted for approval to the Efficiency Board. | Sally Reynolds | TBC | To be submitted to September Board meeting | | | **CIPFA Efficiency Review**\
  | | • The Director of Capital Ambition is asked to write to all project managers, sponsors and CEX outline the main findings of the report and actions necessary to bring the report up to the relevant standards for Capital Ambition.\
  | | • A report by the Director of Capital Ambition on how Capital Ambition plans to validate the financial implications of business cases and PIDs in the future. | Steve Johnson | TBC | Overtaken by new assurance process developed by Capital Ambition Programme Office and is pending implementation. | | | **Current Issues and AOB**\
  | | • Comments and suggestions for the Charter Board meeting on 13 May 2010 to be submitted to the Director of Capital Ambition.\
  | | • The next meeting of the Board needs to be rescheduled as it clashes with LGA conference 2010. | All | 30/04/2010 | Completed | | | Aramide Adeboye | Completed |

Date of next Board meeting: **12 July 2010 (2pm – 4pm)** Subject: Revised Governance Arrangements

Report by: Julia Vernalls, Programme Lead, Delivering Together

Email: julia.vernalls@londoncouncils.gov.uk

Agenda item: 3

Purpose: To note and comment on the revised governance arrangements for Capital Ambition to end March 2011, including the revised scope and title of the Board, and to advise on the appropriate level of project funding to be delegated to the Board.

Executive summary: At its meeting on 15 June 2010, the Capital Ambition Programme Board (CAPB) approved a new governance structure for Capital Ambition to end March 2011. The new structure is linked to the main programme strands within Capital Ambition and ensures robust delivery of a reduced and refined programme with clear accountabilities to the Programme Board. A copy of the revised governance chart is attached as Appendix A.

Under the revised arrangements, the Efficiency Board will be known as the Shared Services and Joint Procurement Board and its terms of reference will change to reflect the revised scope. The Programme Board has appointed Rob Leak, Chief Executive of Enfield as the Shared Services and Joint Procurement champion and Chair of the Board.

A copy of the current terms of reference for the Efficiency Board is attached as Appendix B, and the Board is asked to

i) Consider and comment on the revised scope and terms of reference of the Board and appropriate membership (Appendix C); and

ii) Advise the CAPB on the appropriate level of delegated authority for project funding above which proposals will be referred to the CAPB for ratification (currently £250,000).

Risk: Not applicable

Recommendation: The Board is asked to:

(i) Note the change of name to the Shared Services and Joint Procurement Board; (ii) Appoint two vice chairs for the Board; (iii) Consider and comment on the revised scope and terms of reference of the Board and appropriate membership (Appendix C); and (iv) Advise the CAPB on the appropriate level of delegated authority for project funding above which proposals will be referred to the CAPB for ratification (currently £250,000).

Appendices: Appendix A: Capital Ambition Governance Structure 2010/11 Appendix B: Capital Ambition Efficiency Board Terms of Reference Appendix C: New Draft Board Terms of Reference

Background papers: Future Shape Paper: Capital Ambition Programme Board meeting 15 June 2010. Capital Ambition Programme Board

**London Futures Board**

- **Aim:** To be the steering group for projects which aim to develop new services, capabilities & skills.
- **Scope:**
  - Horizon scanning
  - Innovation
  - Collaborative working
  - New models of delivery
  - Manifesto business cases

**London Self Regulation Board**

- **Aim:** To promote mutual performance improvement, benchmarking, shift in service delivery
- **Scope:**
  - LAPS, LEC, STA
  - Service blueprints
  - Collaborative working
  - Business Intelligence

**Connected London Board**

- **Aim:** To manage the framework for coherent service delivery & service access
- **Scope:**
  - Development & use of customer insight
  - Engagement & participation
  - Tracking views of Londoners
  - Includes ICT enablers for customer access

**Shared Services & Joint Procurement Board**

- **Aim:** To generate and improve major efficiency projects
- **Scope:**
  - Overseas all projects & programmes for procurement & other efficiency projects
  - Supports investment board on procurement issues
  - Includes IT enablers for efficiency

______________________________________________________________________

**Investment & Benefits Assurance Group**

- **Aim:** Delivers a common project assurance process via a system of peer review.
- **Scope:** Provides critical challenge to projects at key points in their lifecycle.
- Assurance process is linked to business case development & appraisal.

______________________________________________________________________

**Exploration**

**Analysis**

**Delivery** CAPITAL AMBITION PROGRAMME BOARD

EFFICIENCY BOARD

TERMS OF REFERENCE

PURPOSE

1. Capital Ambition’s key values are improvement, efficiency and credibility. Its vision is that the capital’s public services will continue to take the lead in innovation, fairness, relevance, efficiency and effectiveness.

SCOPE

2. The Capital Ambition Programme Board (the Board) has established the Efficiency Board to advise on, guide and oversee the implementation of programmes and projects that address the procurement and efficiency matters referred to in the Improvement and Efficiency Strategy for London (IESL), and any other matters delegated to it from the Board.

ROLES

Capital Ambition Programme Board

3. The Efficiency Board will support councils and their partners in meeting and exceeding their efficiency savings target and support the Board in its role to:

- Commission research and set the direction for improved performance, service transformation and efficiency and capacity building across London Local Government
- Agree efficiency priorities, goals and targets for Capital Ambition
- Encourage participation in and garner support for shared solutions in commissioning and service delivery
- Set criteria for efficiency support for individual and groups of local authorities, services and activities.
- Provide mechanism for challenge in relation to authority and service performance on efficiency

Efficiency Board

4. The Efficiency Board will commission or undertake work on behalf of the Board to:

- Analyse and report on research and data to identify performance improvement opportunities and gaps in work stream performance and delivery;

- Consider proposals for procurement, efficiency and service transformation related projects from London public sector professional networks and bodies;

- Develop proposals and funding allocations for procurement and efficiency work to be commissioned;

- Manage, monitor and report on procurement and efficiency related work and projects, including any action necessary to correct or remove support from projects not delivering approved outputs and outcomes;

- Monitor and report on participation and collaboration, raising issues needing higher level intervention or support;

- Measure and report on the return on Capital Ambition funds invested including savings generated and improved service outcomes;

- Ensure effective marketing and communications of projects, outcomes and products and opportunities for sector participation;

- Manage any allocated funding.

**MEMBERSHIP**

5. The Efficiency Board will be chaired by the Chief Executive efficiency champion on the Capital Ambition Programme Board and will comprise representatives from:

- London Councils
- The Greater London Authority
- The Society of London Treasurers – 3 members (SLT)
- London’s professional networks including Directors/representatives of –
  - Adult Social Services
  - Children's Services
  - Environment
  - Housing
  - Human Resources
  - London Heads of Procurement
  - London Society of Information and Technology Managers (SOCITM)
- Other professional networks and/or public sector bodies as appropriate
  - London NHS

**Advisers**

6. Substitute representatives for full members to act in the event of the unavoidable absence of a usual officer representative must announce their substitute role at the beginning of the meeting or as soon as possible after their arrival.

7. Representatives from the Government Office for London and the Improvement and Development Agency will act as advisers, and the Efficiency Board may invite advisers from other organisations appropriate to its work programme. VOTING

8. The quorum shall be a minimum of four members, including 2 from the London Authorities and one of whom must be from London Councils or a member of CELC.

9. Each representative (including substitutes) shall have one vote and decisions of the Board will be taken on a show of hands (unless otherwise agreed by the Chair) by simple majority vote. In the event of an equality of votes, the Chair will have a second or casting vote.

MEETINGS

10. The Efficiency Board will meet at least quarterly and may call additional meetings as required and will be supported by Capital Ambition as appropriate.

11. The Secretary to the Board will give seven clear working days' notice of the time and place of meetings of the Efficiency Board together with an agenda of the matters to be considered. Urgent meetings of the Board of the Board may be called by the Secretary with the approval of the Chair.

12. Project Initiation Documents and other proposals must be received no later than ten working days before dispatch of the agenda papers to enable proper evaluation and recommendations to be formulated.

Confidentiality

13. Meetings of the Efficiency Board are confidential and it may decide to consider politically and/or commercially sensitive items in private session and exclude non Board members and/or the advisers present.

LIABILITIES

14. The Efficiency Board has no legal capacity to enter into contracts.

FUNDING

15. The Capital Ambition Programme Board will determine the level of any delegated authority the Efficiency Board may have to fund and/or commission procurement and efficiency related research or work. Any funding decisions outside the scope of that delegated authority will be taken by the Board on the recommendation of the Board.

Emergency Procedure

16. Where a decision or recommendation regarding funding is needed in advance of a scheduled meeting of the Efficiency Board, the Chair may invoke the emergency procedure.

AMENDMENTS AND TERMINATION

17. The terms of reference and period of operation for the Efficiency Board will be determined by the Capital Ambition Programme Board. Amendments to the terms of reference may be recommended by any member of the Efficiency Board and will be submitted to the Capital Ambition Programme Board for ratification. CAPITAL AMBITION

SHARED SERVICES AND JOINT PROCUREMENT BOARD

TERMS OF REFERENCE

VISION

1. Capital Ambition's vision is that London's public services will continue to take the lead in efficiency, innovation, fairness, relevance and effectiveness.

PURPOSE

2. Capital Ambition's key focus is on efficiency, aligned with improvement, innovation, service transformation and workforce reform.

3. Capital Ambition supports councils and their partners in delivering the shared priorities for their local areas (as expressed in their Local area Agreements targets); and in meeting their efficiency targets. Capital Ambition's values are efficiency, mutuality, improvement, and credibility.

4. London's public services would expect to challenge and support themselves. But Capital Ambition recognises that the current architecture of support and regulation has many other players. So it will coordinate its work with that of the other stakeholders in London's efficiency and improvement architecture; and Capital Ambition will position itself as the 'hub' of efficiency and improvement activity in the capital. It is also committed to learning from – and sharing with – other regions outside London, and other world cities that share some of its challenges.

SCOPE

5. The Capital Ambition Programme Board has established the Shared Services and Joint Procurement Board (the Board) to advise on, approve, oversee and assure the implementation of programmes and projects that deliver significant cashable savings whilst maintaining desired levels of service.

6. The majority of the work will be achieved through:

   • collaboration in the planning, design, development, procurement, management and/or delivery of shared services and assets / joint contracting, including innovative forms of shared service delivery and asset utilisation;

   • the standardisation of specifications and aggregation of services and volumes to enable joint procurement and the delivery of the London Procurement Strategy; and

   • Maintaining and improving the infrastructure and delivery mechanisms

   • Improving the utilisation of resources needed to support the above collaboration.

ROLES

7. The Shared Services and Joint Procurement Board will support councils and their partners in meeting and exceeding their cashable savings target through shared services and joint procurement, and the provision of infrastructure and resources, and will:

   • Encourage, monitor and report on participation in collaboration and shared solutions in commissioning, procurement and service management and delivery raising issues needing higher level intervention or support as appropriate; • Commission, consider and decide on(^1), or recommend approval of, proposals and strategic outline business cases requesting funding for the delivery of significant cashable savings to support collaboration from clusters of London authorities, their public sector partners and other professional networks and bodies;

• To receive evidence from the Portfolio, Investment, Management and Monitoring Group on the history and current position of each project as it enters and passes through the assurance process and to provide approval to move to the next stage and/or take action necessary to correct or remove support from projects not delivering approved outputs and outcomes;

• Manage any allocated funding and report on the return on investment and the delivery of cashable savings and improved service outcomes arising from Capital Ambition funds invested;

• Ensure effective marketing and communications of projects, outcomes and products and opportunities for sector participation.

MEMBERSHIP

8. The Shared Services and Joint Procurement Board will be chaired by the Chief Executive champion on the Capital Ambition Programme Board and will comprise representatives from:

• London Councils (including the nominees from the Chief Executives’ London Committee) • The Greater London Authority • The Society of London Treasurers – 3 members (SLT) • London’s professional networks including Directors/representatives of –

- Adult Social Services
- Children’s Services
- Environment
- Highways and Transportation
- Housing
- Human Resources
- Planning
- Procurement
- Information and Technology Managers(^2) • London NHS • London Universities Purchasing Consortium (LUPC) • Other professional networks and/or public sector bodies as appropriate

Substitutes

9. Substitute representatives for full members to act in the event of the unavoidable absence of a usual officer representative must be notified before the meeting and announce their substitute role at the beginning of the meeting or as soon as possible after their arrival.

(^1) Up to a level delegated by the Capital Ambition Programme Board (^2) To be discussed/decided at the meeting Advisers

10. Representatives from Capital Ambition and the Improvement and Development Agency will act as advisers, and the Board may invite advisers from other organisations appropriate to its work programme.

VOTING

11. The quorum shall be a minimum of four members, including 2 from the London local authorities and one of whom must be from London Councils or a member of CELC.

12. Each representative (including substitutes) shall have one vote and decisions of the Board will be taken on a show of hands (unless otherwise agreed by the Chair) by simple majority vote. In the event of an equality of votes, the Chair will have a second or casting vote.

MEETINGS

13. The Shared Services and Joint Procurement Board will meet at least quarterly and may call additional meetings as required and will be supported by Capital Ambition as appropriate.

14. The Secretary to the Board will give five clear working days’ notice of the time and place of meetings of the Board together with an agenda of the matters to be considered. Urgent meetings of the Board of may be called by the Secretary with the approval of the Chair.

15. Strategic Outline Business Cases and other proposals must be taken through the Capital Ambition assurance process and be received no later than ten working days before dispatch of the agenda papers to enable proper evaluation and recommendations to be formulated.

Confidentiality

16. Meetings of the Shared Services and Joint Procurement Board are confidential and it may decide to consider politically and/or commercially sensitive items in private session and exclude non Board members and/or the advisers present.

LIABILITIES

17. The Shared Services and Joint Procurement Board has no legal capacity to enter into contracts.

FUNDING

18. The Capital Ambition Programme Board will determine the level of any delegated authority the Shared Services and Joint Procurement Board may have to fund and/or commission shared services, procurement and related work. Any funding decisions outside the scope of that delegated authority will be taken by the Capital Ambition Programme Board on the recommendation of the Shared Services and Joint Procurement Board.

Emergency Procedure

19. Where a decision or recommendation regarding funding is needed in advance of a scheduled meeting of the Shared Services and Joint Procurement Board, the Chair may invoke the emergency procedure. AMENDMENTS AND TERMINATION

20. The terms of reference and period of operation for the Shared Services and Joint Procurement Board will be determined by the Capital Ambition Programme Board. Amendments to the terms of reference may be recommended by any member of the Shared Services and Joint Procurement Board and will be submitted to the Capital Ambition Programme Board for ratification.

John O'Brien Chief Executive, London Councils Revised 12 July 2010 Project/Subject: Review of Shared Services & Joint Procurement Programmes and Projects and Overall Financial Position

Report by: Julia Vernalls and Caroline Stanger, Programme Leads, Shared Services and Joint Procurement

Purpose: To agree the findings from the review of existing projects and programmes that relate to shared services and joint procurement.

Financial implications 2010/11: Potential clawback of funds from discontinued projects, of £241k. These resources will add to the funds available for reinvestment in the Capital Ambition programme.

Executive summary:

At its meeting on 15 June 2010, the Capital Ambition Programme Board agreed that all sub Boards should review their existing projects to consider whether to continue investment, scale back or where appropriate, discontinue funding in order to release funding for re-investment in priority areas alongside the recently confirmed final instalment of central Government funding.

A review of all projects has been undertaken by the Programme Leads, supported by the Programme Management Office. Projects were evaluated against three key criteria:

(i) potential to deliver significant efficiency savings (ii) level of participation (including potential for expansion) (iii) stage in project lifecycle. [discussion with boroughs]

The output from this work is contained in Appendix A.

5 Projects have been recommended for discontinuation of funding. These for the most part have not started or incurred any expenditure. If agreed, approximately £241k of revenue funding will be released for allocation to new projects.

A further 4 projects are subject to further discussion. This may or may not result in the discontinuation or reduction of funding. Appropriate recommendations will be made to the next meeting of the Shared Services and Joint Procurement Board but it is anticipated that there will be scope to claw back some additional funds.

The current overall Capital Ambition financial position is contained in Appendix B. The available funding does not factor in funding requests being considered at this meeting, or funding that may become available through discontinued projects.

The Programme Board also asked for further work to be undertaken on how any Capital Ambition legacy might be funded which may have implications for the way in which new projects are funded for the remainder of 2010/11. The Programme Board will consider this further at its meeting on 27 July 2010. **Risk:** All projects recommended for continuation will undertake a risk assessment against a range of criteria focused on delivery of the intended benefits.

**Recommendations**

That the Board:

(i) considers the review of existing projects and agrees the individual project status as recommended in the report; and

(ii) notes the overall Capital Ambition Financial Position.

**Appendices:**

Appendix A - Review of Shared Services & Joint Procurement Programmes and Projects

Appendix B – Capital Ambition Overall Financial Position – July 2010

## Recommended to Continue

| Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Overall Progress | Potential for expansion | Total Investment Agreed to Date | Total Claims to Date | Variance | |-------------------------------|------------------------------------------|--------------------------------------|------------------|------------------------|--------------------------------|---------------------|----------| | JIP - Transforming Community Equipment Services in London | Savings doubled to £5.6m. Project on time to deliver by August 2011 | All | On Track | None | 1,928,000 | 276,691 | 1,651,309 | | London Energy Project (All Phases) | High level of cashable savings across London of £252 million by 2015. Potential for further savings from smarter use/reduction in energy consumption. | All | On Track | GLA Group | 612,000 | 417,000 | 195,000 | | Environmental Supply Chain Assessment for the London Boroughs | First year complete. Contractual commitment to second phase. Entering into profit share agreement with Trucost and should recover full cost of project. | All | On Track | GLA Family | 585,761 | 145,350 | 440,411 | | London Procurement portal hub initiative (all phases) | Key resource for future joint procurement and collaboration and an enabler for easier SME access to public sector contracts. | 11 | On Track | Up to 33 + GLA and wider public sector | 492,940 | 49,176 | 443,764 | | JIP - Assistive Technology | Approved by CAPB 15 June 2010. Cashable savings of £10m p.a. forecast. | TBC | On Track | All | 406,629 | 45,043 | 361,586 | | East London Shared Solutions (ELSS) | Continue - significant engagement across the region and potential for high level of savings | 6 | On Track | None directly although other sub regions following similar approaches | 338,000 | 90,495 | 247,505 | | Cultural Improvement Programme - London Library Change Programme (Phase 3) | Up to £30 million cashable saving by 2015 - very strong support from all boroughs | 33 | Behind Schedule (management controls now in place) | TBC | 250,000 | 0 | 250,000 | | Commercial Vehicles Study London Study Outcomes (formerly Category Mgmt - Vehicles) | Some DfT ring fenced funding. Project manager being appointed. Should achieve 10% savings on £100m p.a. spend on procurement and maintenance of commercial fleet. Best practice guidance on procurement options appraisal. | 20 | On Track | Up to 33 + GLA | 241,700 | 18,812 | 222,888 | | Online Expenditure Analysis | Essential to Pan London Procurement Portal and future procurtement strategy support | All | On Track | GLA Group | 217,800 | 165,111 | 52,690 | | Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Overall Progress | Potential for expansion | Total Investment Agreed to Date | Total Claims to Date | Variance | |-------------------------------|------------------------------------------|--------------------------------------|------------------|------------------------|--------------------------------|---------------------|----------| | Strategic Supplier Initiative (SSI) Project Phase 4 | Extended to ICT, Highways and Construction | TBC | On Track | Up to 33 | 215,000 | 0 | 215,000 | | Climate Change - Decentralised Energy Network projects | London wide engagement and key partnership project. Real potential for significant CO2 reductions | 19 | On Track | 14 | 210,000 | 6,216 | 203,784 | | London Boroughs Legal Alliance for Shared Services Professional Service | High level of engagement from partner boroughs and sub-regions wishing to join in the project. Potential cashable savings of £10.4 million by 2015 | 8 | On Track | 25 | 202,845 | 6,820 | 196,025 | | E-Auctions - ICT | PID to SSJP Board September 2010 £60k for e-auction; SRD & extended category scope. Cashable savings. | 16 | On Track | Up to 33 + GLA | 160,850 | 137,236 | 23,614 | | North London Strategic Alliance (NLSA) Cashable Savings Project | Project has only just commenced - there is potential for cashable savings and also increased take-up of other CA projects e.g. LBLA | 6 | On Track | None directly although other sub regions following similar approaches | 160,000 | 0 | 160,000 | | Climate Change - Homes Retrofit | London wide engagement and key partnership project. Real potential for significant CO2 reductions | 9 | On Track | 24 | 110,000 | 41,466 | 68,534 | | National Care funding calculator Phase II | Project manager appointed for 2010/11. Potential efficiency savings of £11 million | 16 | On Track | Up to 33 | 95,000 | 0 | 95,000 | | Delivering value through London Cultural services - Working with children services | Work has only just commenced but has significant engagement across all Boroughs | 33 | On Track | TBC | 85,000 | 2,486 | 82,514 | | Proclass Authority Mapping | Work commissioned for completion with 09/10 OEA | 29 | On Track | Up to 33 + GLA and some PCT e.g. H&F | 60,000 | 24,650 | 35,350 | | Category Mgmt - Highways | PID to SSJP Board 12 July for £256k to complement £750k TfL funding to complete the work. Minimum 10% savings on £300m spend p.a. | TFL and 31 | On Track | Up to 33 + GLA | 53,000 | 250 | 9,750 | | Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Overall Progress | Potential for expansion | Total Investment Agreed to Date | Total Claims to Date | Variance | |--------------------------------|------------------------------------------|--------------------------------------|------------------|------------------------|--------------------------------|---------------------|----------| | Delivering value through London Cultural services - Heritage change programme | Work just started and will be crucial in the current environment | 33 | On Track | TBC | 50,000 | 0 | 50,000 | | Collaboration in Construction - Outline Strategic Framework Model for Pan London Construction | Report to be delivered mid July 2010 | TBC | On Track | Up to 33 + GLA | 49,500 | 4,500 | 45,000 | | Establishment of the South East London Shared Services Partnership | Project has just commenced - part of strategy for supporting sub-regional partnerships | 6 | On Track | None directly although other sub regions following similar approaches | 45,000 | 0 | 45,000 | | London Procurement Training Programme (training renewal project) | Out to tender by Tower Hamlets | TBC | On Track | Up to 33 + GLA | 25,000 | 0 | 25,000 | | Local Authority shared systems for film applications | Project is nearly complete and has already delivered most of the targets in the PID | 10 | On Track | 4 | 17,000 | 0 | 17,000 | | Contract Register Service - London Wide Enablement | Essential to Pan London Procurement Portal and future procurement strategy support | All | On Track | GLA Group | 9,500 | 0 | 9,500 | | Collaboration in Construction - Review of Framework contracts | £3bn spend across London. Based on highways collaboration should achieve significant savings 10%+ through use of standard specifications, frameworks and e-auctions | All being consulted | On Track | Up to 33 + GLA | 6,500 | 0 | 6,500 |

**Recommended to Discontinue**

| Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Progress | Number of potential addition Boroughs (Scaleability) | Total Investment Agreed to Date | Total Claims to Date | Variance | |--------------------------------|------------------------------------------|--------------------------------------|----------|-----------------------------------------------|--------------------------------|---------------------|----------| | Climate Change - Borough Best Practice | Not started - superseded by climate change skills fund | N/A | N/A | N/A | 120,000 | 0 | 120,000 | | Pension Administration | No project developed | N/A | N/A | N/A | 52,958 | 0 | 52,958 | | National E-Auctions Project | Low interest from HoP | N/A | N/A | N/A | 50,000 | 0 | 50,000 | | Category Mgmt - Catering and Food Supplies | No scope for significant efficiency savings | N/A | N/A | N/A | 10,000 | 1,700 | 8,300 | | Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Overall Progress | Potential for expansion | Total Investment Agreed to Date | Total Claims to Date | Variance | |-------------------------------|------------------------------------------|--------------------------------------|------------------|------------------------|--------------------------------|---------------------|----------| | E-Auctions - Building Materials | Covered by construction project | N/A | N/A | N/A | 10,000 | 0 | 10,000 |

**Recommended for further discussion**

| Project Programme Package Name | Brief rationale for final recommendation | Number of Boroughs Currently Involved | Progress | Number of potential addition Boroughs (Scaleability) | Total Investment Agreed to Date | Total Claims to Date | Variance | |-------------------------------|------------------------------------------|--------------------------------------|----------|-----------------------------------------------------|--------------------------------|---------------------|----------| | Integrating Public Services in Hammersmith and Fulham | Should not agree continuation of this project until we have reviewed to ensure that it is on target to deliver against clear outcomes. | N/A | Review | N/A | 500,200 | 158,601 | 341,599 | | Development of a Centre of Excellence for Parking Back Office functions (RBKC and LBHF) | Decision on funding for implementation deferred pending sign up of more authorities. | N/A | Review | N/A | 140,951 | 134,783 | 6,168 | | Exploring greater integration between LB Waltham Forest and Waltham Forest NHS | Project does not seem to be progressing and final results are unclear. On hold, possible outcomes not clear. | N/A | Review | N/A | 120,000 | 4,330 | 115,670 | | Passenger Transport Services Commissioning Hub (approved in principle, £30k released by the Efficiency Board in November 09) | First phase completed. This funding relates to the Phase 2 of the project | N/A | Review | N/A | 100,000 | 0 | 100,000 |

### Capital Ambition - Financial Position - July 2010

#### Item 4 - Appendix B

| Description | Revenue | Capital | Total | |--------------------------------------------------|---------|---------|-------------| | **Balance Brought Forward from 31 March 2010** | | | | | Revenue balance brought forward | 10,084,113 | 0 | 10,084,113 | | Capital balance brought forward | 0 | 6,769,318 | 6,769,318 | | **Total** | 10,084,113 | 6,769,318 | 16,853,431 |

(Cash in bank H & F - 1.4.10)

#### Add New Grants and Subscription Funding

| Description | Revenue | Capital | Total | |--------------------------------------------------|---------|---------|-------------| | CLG RIEP Funding (Revenue) | 6,928,875 | 0 | 6,928,875 | | CLG RIEP Funding (Capital) | 0 | 769,875 | 769,875 | | Climate Change Skills Fund | 1,040,000 | 0 | 1,040,000 | | London Connects Subscription | 330,000 | | 330,000 | | **Total** | 8,298,875 | 769,875 | 9,068,750 |

**Total Gross Funding**

| Description | Revenue | Capital | Total | |--------------------------------------------------|---------|---------|-------------| | **Total** | 18,382,988.00 | 7,539,193.00 | 25,922,181.00 |

(Total Gross Funding Available)

#### Less

| Description | Revenue | Capital | Total | |--------------------------------------------------|---------|---------|-------------| | Forecast Central Hub Costs | 1,800,000 | 0 | 1,800,000 | | Accruals from 2009/11 | 6,982,692 | 0 | 6,982,692 | | Existing 2009/10 Commitments (planned to be paid in 2010/11) | 5,250,587 | 0 | 5,250,587 | | New 2010/11 Commitments (since 1.4.10) | 1,035,189 | 0 | 1,035,189 | | Climate Change Skills Fund Project(s) | 1,040,000 | 0 | 1,040,000 | | **Total** | 16,108,468 | 0 | 16,108,468 |

(Total Net Funding Available)

| Description | Revenue | Capital | Total | |--------------------------------------------------|---------|---------|-------------| | **Balance Available** | 2,274,519.97 | 7,539,193.00 | 9,813,712.97 |

(Total Net Funding Available) **Project:** Transforming London Highways Maintenance

**Report by:** Ken Cole, Procurement and Commercial Advisor

**Email:** ken.cole@londoncouncils.gov.uk

**Agenda item:** 5

**Strategic Theme:** Delivering Together

**Purpose:** To update the Board on the outcomes of Phase 1 and to request funding of £274,090 to complete Phase 2 as described in the project Initiation document appended and which should realise at least 10% (£34m) savings per annum.

### Financial implications 2010/11:

#### Capital Ambition Revenue Funding

| Financial Year | Existing Project Approval | Committed/Spend In Year Total | Balance | New Funding Request | Total Existing Approval + New Funding Request | |----------------|---------------------------|-------------------------------|---------|---------------------|---------------------------------------------| | 2009/10 and 2010/11 | 53,000 | 22,090 | 30,910 | 274,090 | 327,000 | | 2010/11 | 30,000 | 30,000 | 0 | 30,000 | | **Totals** | | | | **274,090** | **357,000** |

#### Other Funding

| Financial Year | Existing Project Approval | Committed/Spend In Year Total | Balance | New Funding Request | Total Existing Approval + New Funding Request | |----------------|---------------------------|-------------------------------|---------|---------------------|---------------------------------------------| | 2010/11 | TFL | 700,000 | - | - | 700,000 | | 2010/11 | OGC | 40,000 | - | - | 40,000 | | **Total** | | | | | **740,000** |

**Capital Ambition & Partner Total** | **1,097,000** Executive summary: There are currently circa 100 contracts in place to manage London’s Highway network with an annual value of £350 million. These contracts range in value from £40k to £33 million per annum with identified annual costs of preparation of £1.2 million and subsequent costs of management and supervision in the order of £20 million. The market is dominated by five providers, with two of the providers accounting for nearly 60% of the expenditure.

Work carried out under Phase 1 of the attached business case shows significant variations in costs for similar types of activities. Returns from 26 boroughs showed that there was a 15% difference between the lowest and average borough costs based on existing contracts indicating a potential £34M across saving across London. There were also other wide variations on costs in like for like areas such as electrical testing.

Phase 2 of this project will look to rationalise the number of contracts; reduce the costs of preparation and management, and move to fewer more standardised contracts (4/5 across London), which will reduce the variations in costs and reduce the overall cost of this sector of activity within London. The project will be seeking to deliver £24m across London as a minimum with a further one off saving of £1m from reduced contract preparation costs. TfL is looking for savings of at least 10%, which is approximately £10m, totalling £34m. There are also unquantified benefits which include:

- Simplifications of the supply chain
- Use of e-Auctions for materials
- Reduced tendering costs
- Core specifications
- Consistent approach to efficiency and performance management
- Improved coordination of road works and enhanced risk management

The project has some excellent backers including TfL, OGC, LOTAG (Highways Network in London) and will be sponsored by Martin Smith (CEO) of LB Ealing. SLT have also been approached to provide a contact. In terms of funding, TfL will provide £700k and OGC £40k in kind funding (services of Zerrin Lovett).

In terms of delivery there are three strands:

- Movement towards a common contract, with sub-regional variants. East London Solutions are planning to lead on the latter
- E-Auctions starting with electrical testing but also rapidly moving towards standardise materials. Five other regions have agreed in principle to join forces with London in this area
- A proactive SRD programme targeted at FM Conway and Volker, and with three other provider in reserve

Work is already advancing on the second and third points with good progress in both areas. Full details are available in the PID.

Risk: The project will cease immediately without the funding and the opportunities identified will be lost. Recommendations: That the Board: (i) Notes the Outline Business Case signed off by TfL, LOTAG and OGC (ii) Recommends approval of Capital Ambition funding of £274,090 to complete the project.

Appendices: Appendix A: Business Case Appendix B: PID Appendix Bi: Cashable savings model Appendix Bii: Key activities and milestones Appendix Biii: Risk and Issues register Appendix Biv: Governance arrangements Appendix C: Communications Strategy

Background papers: None Pan London Collaborative Highway Works:

Business Case – Executive Summary

Of the Questionnaires sent to the 32 Boroughs, the City of London and TfL we received 26 returns, a return rate of 75%.

The total highway spend identified by the 25 Boroughs was £265m/annum, which when grossed up for the 33 Boroughs and TfL would give £407m. (This excludes those Authorities Street Lighting Activities which are PFI’s.)

Of this the Boroughs identified a total highway works spend of £169m/annum (excluding PFIs) which when grossed up for London, including TfL, would indicate a spend on works of £284million, or just 2/3 rds of the total Highway spend. The balance of the spend will be Highway Client activities and management/supervision of the contracts.

In total the 25 Boroughs and TfL identified they had a total of 76 Highway Contracts which averaged 3 contracts per Authority. The contract value ranged from £40k to circa £20million, with an average Borough value of £2.3million, although this increases to £3.0million when the TfL contracts were taken into account. They covered single activities such as emergency response right through to multi-disciplinary covering all activities on the highway. The periods they covered were from one year to 20 years with an average contract period of 6 years.

The average cost of preparation of the Contracts was £73k, which would equate to a total cost across London of circa £7million over the average period of the contracts. (This is felt to be conservative as the cost of contract preparation nationally has been identified as ranging from £100k (Midlands Highway Alliance) up to £250k, with an average figure commonly quoted as £150k, OGC use a figure of £165k, which would give a potential London range of £10-£25million with an average of £15 million.)

In addition to the cost of preparing the contracts a further cost of £22m/annum was identified in their subsequent contract management and supervision.

In order to identify the potential savings from aggregation of the contracts contract models were developed for both inner and outer Boroughs for both carriageway and footway based on the returns received.

From the two options costed, one based on savings for those Boroughs above the average cost operating at the average and the other on all Boroughs operating at the cheapest identifiable contract available, possible savings on works of between 5-15% could be made by the Boroughs on the overall works spend which equated to £11-34million. (Nationally, pathfinders looking at highway works have identified cost savings conservatively in the region of 4 – 10% can be achieved immediately from aggregation and better coordination).

With the possible savings identified no account has been taken of potential savings from the reduced cost of tendering or the use of common specifications.

The **cheapest overall contracts** for both Inner and Outer London were as a **result of single larger contracts** being let, not as a result of multiple contracts, and were contractors who had a larger share of the market not niche local contractors.

Over 30 Contractors in total across the 25 Boroughs and TfL with **5 Contractors** having over **50% of the Contracts and 80% of the value**. Within the 76 contracts identified, one contractor has 13 just with the Boroughs alone, with a total value of around £46m/ annum, just short of 30% of the total Borough contract value. A further contractor has 9 Borough Contracts, with a value of £41.5m or 25% of the market. Whilst there appears to be good competition in the market **2 contractors** alone have cornered over **50% of the Borough market in value terms**.

A **cost benefit analysis** based on 100% of the Boroughs in London participating would indicate a **return of 41.3:1, reducing to 7.0:1** if a sensitivity analysis is applied using the lower levels of savings and a participation rate of 46%.

In addition to considering larger collaborative contracts pan London a hierarchy of quick wins have also been identified to achieve some of the potential savings identified:

- E – Auctions for material and specialised activities
- Service Development Reviews
- Common Specifications
- Price Benchmarking
- Common systems
- Sharing of Best Practice Transforming London Highways Maintenance

Note: Please ensure title clearly describes the remit of the project before initiation. Capital Ambition may rename a project for clarity and to differentiate it from others.

Lead Authority: Transport for London

Project Sponsor: Dana Skelley (TfL)(Programme Director) and Martin Smith (CEO LB-Ealing)(Capital Ambition Programme Sponsor)

Project Manager: Chris Tunstall (Programme Manager)

Project Manager Contact Details: tunstallassociates@talktalk.net, mobile 07595303904

Author: Chris Tunstall

Date: 18th June 2010

Project Start date 01/04/10 Project End Date 01/04/2013

Please note: Capital Ambition does not support projects that benefit single authorities. Proposals should usually be joint submissions or be submitted by a lead partner on behalf of others. In exceptional circumstances Capital Ambition may support a bid but it must demonstrate specifically the value of outcomes and learning and how it can then be transferred to other organisations.

Revision History - Please ensure that you keep track of your revisions using this version control log.

| Version | Created | Reasons for/Summary of Changes | Author | |---------|-----------|--------------------------------|--------------| | 0.1 | 18/06/2010| Draft | Chris Tunstall| | 0.2 | 05/07/2010| Final Draft | Chris Tunstall|

## 1. Project Overview

### 1.1 Project Summary (Maximum 100 words)

The pan London highways project, will in conjunction with its partners, reorganise and provide collaborative and shared contracts across London and potentially into the home counties for the provision of maintenance works to the highway network, the supply of services and the provision of materials. The potential value of this sector of work across the Boroughs and TfL in London is circa £350 million. To achieve savings on this spend now and in the future there are a number of key but interlinked projects being progressed; Supplier Relationship Development with the 2 key existing suppliers; common specifications; common contract conditions; and e-auctions for services and materials.

**Note:** Please provide a brief summary with a maximum 100 words. You will have the opportunity to describe the detail of the project in Section 2.

### 1.2 Partner organisations involved in the submission of this bid

- London Technical Advisors Group – LoTAG (which covers all London authorities and TfL)
- Lead London Boroughs
  - Lambeth
  - Hammersmith and Fulham
  - Newham
  - Enfield
- Transport for London
- London Contracts and Supplies Group (LCSG)
- London Councils
- Office of Government Commerce
- Capital Ambition
- Associate Partner – London Fire Brigade

**Note:** Please list the partner organisations that are involved in the submission of this bid (i.e. joint proposers). Organisations that are directly involved in the delivery of the project should be listed separately.

### 1.3 Project Aim

**Maximum 30 words**

To make cashable and non cashable savings in respect of the £350 million currently spent on maintaining the highway network in London

**Note:** The aim of the project should clearly state the changes you hope to achieve as a result of your work.

**Example** To improve the opportunities of people in London who are long term homeless.

### 1.4 Project Objective(s)

Objectives should be measurable and outline the activities you will undertake and the services you will offer to deliver the aim. Each objective should be a one sentence statement, or a number of statements starting with the word ‘to’

The pan London highway project objectives are to:

- provide by 2013 a common specification and sub regional contracts across London for use by the London Boroughs and TfL
- provide savings from the use of common specifications and contracts in respect of highway maintenance activities
- make savings in contract procurement by significantly reducing the number of contracts for highway maintenance activities across London
- subsequently make savings from the reduced amount of contract management required
- identify and make savings from existing contracts through the use of Supplier Relationship Development
- make savings from the use of e-auctions for the provision of highway services i.e. electrical testing and inspection, and the supply of materials

**Example**

Staying with the example aim in 1.4 the objectives could be:

- To provide training on core job skills and job search skills to xx number of people by January 2011
- To offer supported work placements to xx number of people by Feb 2011

### 1.5 Is this bid for funding linked to a previous bid or for work delivered in an earlier phase?

If yes, please provide a brief explanation about the work previously delivered and the costs. Please include the project reference number (URN), project dates, outputs, outcomes and funding awarded by Capital Ambition.

**Note:** You can include information as an appendix if necessary. Yes – this is linked in with two earlier bids. The first was for the feasibility study in September 2009 and the second via the Supplier Relationship Development project in April 2010. The later was in relation to F M Conway and Volker.

1.6 Business and Policy Context

Note: Describe the circumstances relevant to the project and provide a brief assessment of how the business needs are currently being met or not met. Briefly outline how this project will bridge the gap between the current situation and the stated objectives, setting out why the project is needed and what it will do to meet that need.

In order to manage and maintain London’s Highway network there are currently circa 100 contracts with an annual value of £350 million ranging in value from £40k to £33million/ annum, with identified annual costs of preparation of £1.2million and subsequent costs of management and supervision in the order of £20 million. In addition to which there are significant variations in costs for similar types of activities.

The project will look to rationalise the number of contracts, reduce the costs of preparation and management and move to fewer more standardised contracts, which will reduce the variations in costs and reduce the overall cost of this sector of activity within London.

1.7 Funding Requested

| Total Project Cost (£) | Amount of REVENUE Funding Requested from CA (£) | Amount of CAPITAL Funding Requested from CA (£) | Total Funding Requested | |------------------------|-----------------------------------------------|-----------------------------------------------|------------------------| | E-Auction | £ 40,000 | £ 39,000 | | | SRD | £ 69,000 | | |

Note: Revenue expenditure includes staff salaries, rent, heating, light, maintenance, marketing, and publicity, professional and legal fees.

Note: Capital expenditure includes building and refurbishments works, plant and equipment, purchase of land, fixtures and fittings and professional fees associated with capital expenditure.

Total cost plus the amount of funding requested from Capital Ambition. Further details will be needed in Section 3.

### Specification development

- £319,000
- £392,000
- £15,000
- £50,000
- £70,000
- £120,000
- £(30,910)
- £1,075,000

### Contract Preparation & Writing

- £266,000

### Lean Construction Consultant

- £(30,910)

### Tender Stage (incl. PQQ, ITT, Review, Award)

- £274,090

### Programme Management

### Other

### Existing Capital Ambition (unallocated funding)

- £1,075,000

### Total

- £274,090

______________________________________________________________________

### 1.8 Summary of Benefits by Type

| Benefit Type | Tick as Appropriate | Please state/quantify the benefit for each ‘tick’. | |--------------------------------------------------|---------------------|--------------------------------------------------| | Cash Savings | yes | £12m/year 2013 to £22m/year 2020 | | Efficiency Gains – contract savings | yes | £0.66m 2013 rising to £2.62m 2020 | | Cost Avoidance – contract preparation | | | | Capacity Building | | | | Performance Improvement | | | | Customer Satisfaction | | | | Other | | | 2. Project Detail

2.1 How does the proposed project address one or (or more) of Capital Ambition’s themes and funding priorities?

Note: Please describe how your proposal addresses one (or more) of the Capital Ambition themes (Connected London, Delivering Together, Raising the Bar and Developing Capability) as well as priorities set out in CSR 2007, Local Area Agreements, National Indicator 179 and National Improvement and Efficiency Strategy themes of innovation, Empowerment, Economic Renewal and Value for Money.

You should also demonstrate how learning, products and outcomes have relevance and value beyond those authorities/organisations directly involved in the project and identify areas where there are opportunities for skills and capacity building.

Addressing Themes

Reduction in the number of contracts from circa 100 to around 4/5 across the whole of the London highway network will address most if not all of the above themes by:

- Greater alignment of approach
- Simplifying range of contract types to help improve tendering and delivery of efficiencies by the supply chain and adoption of common systems
- Development and universal adoption of common standards, specifications and model contract documents
- Reduced tendering costs
- Better management of the supply chain
- Encouraging greater highway collaboration particularly between adjacent authorities
- Developing a consistent approach to efficiency and performance management
- Coordination of roadwork’s
- Improved response to incidents
- Joint forward planning
- Smoothing of the traffic flow
- Improved strategic risk management of road network
- Pan London E-Auctions for the supply of Services and goods
- Contract efficiency savings
- Contract preparation savings
- Contract management savings

Wider Learning, Products and Outcomes Contact has already been made with all other RIEP’s nationally in respect of the work being undertaken with e-auctions and standard specifications. With positive responses already from the NE, SE, EM, WM and Y&H. London is also an active member of NIEP Highways Collaborative Group.

The project will promote to, and work closely with, individual/groups of Authorities interested in pursuing collaborative working particularly in the Home County Authorities.

In addition to working closely with Government Departments such as OGC and DfT we will also develop good practice guidance in conjunction with professional bodies such as the Technical Advisors Group TAG and the Association of Directors of Environment, Economy and Transport ADEPT.

All presentations and information sheets/packs will be made freely available to local authorities and the like together with standardised contract documents and specifications.

See also ‘Communication Plan’ attached

### 2.2 Who are the partners directly involved in running the project and what will they contribute to its success?

| Please List partners: | How will they contribute to the success of this project? | |-----------------------|--------------------------------------------------------| | OGC | e-auctions for services and supply of materials pan London | | TfL and London Boroughs | Standard specifications and contracts pan London | | London Contracts and Supplies Group | Collaborative contracts pre 2013 | | London Fire Brigade | Supplier Relationship Development with current 2 largest suppliers of highway maintenance services in London | | Capital Ambition | Highways Systems Survey |

### 2.3 What are the intended outcomes of this project?

When considering intended outcomes, you need to ask the question ‘What changes or effects should come about as a result of the project?’. Outcome statements typically start with words such as improved, increased, enhanced and reduced.

| Outcome No. | Outcome Description | |-------------|---------------------| | 1 | Reduced costs of highway maintenance activities through a significantly reduced number of contracts through the award of a standardised contract and specification | | 2 | Reduced cost of contract preparation through a 95% reduction in the number of contracts | | 3 | Reduced contract management | | 4 | Reduced costs in current contracts through the use of Supplier Relationship Development | | 5 | Reduced costs in the procurement of Services and Materials through e-auctions | 2.4 What outputs will the project deliver?

Outputs (sometimes called ‘deliverables’) are tangible things that are to be delivered by the project e.g. toolkit, procedure manual, training strategy. Project phases are typically initiation, planning, execution and closure.

| No. | Project Stage or Phase | Description of Output | Target Completion/Delivery Date | Cost £ | |-----|------------------------|------------------------|---------------------------------|--------| | 1 | Award of a standard contract and specification | April 2013 | £966,000 | | 2 | Reduced cost of contract preparation | April 2013 | Incl. in Output 1 | | 3 | Reduced cost of contract management | April 2013 | Incl. in Output 1 | | 4 | Supplier Relationship Development | April 2011 | £69,000 | | 5 | Phase 1 e-auctions - services | April 2011 | £20,000 | | 5 | Phase 2 e-auctions - materials | April 2012 | £20,000 |

2.5 How will outputs be rolled out beyond partners that are participating in the project?

Please describe how each of the outputs described above will be circulated, marketed and implemented externally.

| Output No. | Roll out strategy | |------------|-------------------| | 1 | Through LoTAG meetings and website, London Councils(already presented twice to Chief Executives) and monthly newsletter within London; national bodies such as ADEPT and regional seminars and the NEIP outside of London. See also the attached Communication Plan | | 2 | As above | | 3 | As above | | 4 | As above plus for London workshops and negotiation groups | | 5 | As 1 above | 2.6 What benefits are sought from running this project?

We need to understand what benefits are sought by running this project. You should complete the table below and be specific in terms cash savings (what, how much over what period?), efficiency gains (how, impact?), Cost avoidance (what, how much over what period?) and Capacity Building. The headings shown below are not exhaustive and addition headings can be added where necessary.

| Benefit Heading | Description (what benefits?, how much?, over what period?, impact?) | |-----------------|---------------------------------------------------------------------| | Cash Savings\* | E-Auctions – Difficult to quantify but around 10% of contract cost. | | | Pre 2013 collaborative work and Supplier Relationship Development – Difficult to quantify. | | | £12.03m 2013 rising to £22.18m 2020 per year. This is the total possible cash saving assuming all Boroughs join the pan London Contracts on expiry of their own contracts. After 2021 the ongoing cash saving could be £33m/ year. See the attached ‘PID Cashable Saving Model’. | | | The above is achievable on the basis of a £1.07million investment over the next 3 years and an ongoing cost of £250k/ year from 2013 on for contract(s) management. | | | Based on the maximum possible saving i.e. 15% and 100% take up gives a benefit cost ratio in excess of 40:1. Taking a more cautious approach based on a 5% saving and assuming only a 50% Borough take up gives a benefit cost ratio of just under 10:1. | | Efficiency Gains| £0.66m 2013 rising to £2.62m 2020 cumulative\*. This is total possible efficiency gain assuming all Boroughs join the pan London contracts on expiry of their own contracts. After 2021 the ongoing efficiency gain could be £1.2 million per annum. | | | \*Based on £73,000 average cost per contract | | Cost Avoidance | | | Capacity Building| | | Performance Improvement | | | Customer Satisfaction | | | Other | | \*We require clear information about projected return on investment for projects that claim to deliver efficiency savings. Please use mietool (or a robust equivalent) to support your savings estimates, and provide the supporting documentation. If you do not have any mietool trained staff, please see the following website for further details. http://www.londoncouncils.gov.uk/capitalambition/resourcesandperformance/bpcasestudies/mietool.htm

2.7 What is the Equalities Impact of this project?

Note: Please carry out a relevance assessment before submitting this proposal and describe what steps you have taken to assess the equalities impact. Any adverse impacts identified should be outlined in the proposal along with mitigating actions.

One particular area of concern is the possible impact on SME’s.

To address this concern work will be undertaken to help develop consortia to provide the capacity and financial and financial strength to enable them to tender for the work. The contracts will also be based on sub regions with the ability for suppliers to bid for one or more. 2.8 Legacy planning – What is the legacy of this project?

Please describe how will the work undertaken during the running of this project will be sustained or carried on once the project has been completed.

**Note:** Please explain how the work undertaken during the running of this project will continue to deliver benefits after project closure. How will outputs be ‘owned’, maintained or updated after project closure? Please provide details on how the project outcomes will be sustained.

A standard set of contract documentation and specifications will be available together with a fewer number of pan London contracts that will be available for use by the London authorities. To ensure ongoing savings can be achieved and subsequently enhanced ‘lean construction’\* will be a feature of the development of the contract documentation and performance contract methodology used with regard to its continued emphasis. As each Borough will enter into a separate contract with the pan London Supplier for that sub region there will be opportunity for both individual and collective ownership across the sub region and the London Region.

Supplier Relationship Development will not only look to gain efficiencies from existing contracts but the outcomes will also be used to develop the new pan London contracts.

Once experience has been gained of the use of e-auctions and the benefits that can accrue from them there will be a greater desire to look at other areas within Highways for their use.

\*lean construction – is about designing and operating the right processes and systems, resources and measures to deliver things right first time and eliminate waste. 3. Project Resourcing

3.1 Have you secured or are you seeking match funding for this project? Yes/No If yes, please complete details of match funders in the table below:

| Funder | Amount (£) | Is Funding Secured? | Decision Date (if not secured) | |---------------------------------------------|------------|---------------------|--------------------------------| | TfL | 700,000 | Yes | | | OGC | 40,000(in kind) | Yes | | | Capital Ambition – Highways SRD | 30,000 | Yes | | | Capital Ambition – Existing Approval | 30,910 | Yes | |

3.2 What is the anticipated CAPITAL spend profile of funding requested from Capital Ambition?

| Year | Quarter 1 (£) | Quarter 2 (£) | Quarter 3 (£) | Quarter 4 (£) | Total (£) | |------|---------------|---------------|---------------|---------------|-----------| | 1 | | | | | | | 2 | | | | | | | Total| | | | | |

3.3 What is the anticipated REVENUE spend profile of funding requested from Capital Ambition?

| Year | Quarter 1 (£) | Quarter 2 (£) | Quarter 3 (£) | Quarter 4 (£) | Total (£) | |------|---------------|---------------|---------------|---------------|-----------| | 1 | | 140,000 | 134,090 | | 274,090 | | 2 | | | | | | | Total| | | | | | 3.4 Project Staffing

The following staffing will be deployed:

1 x Programme Manager - now till April 2013 (Consultant)

3 x Specification Developers- August 2010 - July 2011 (Agency)

3 x Contract Development - January 2011 - March 2012 (Agency)

1 x Project Manager SRD - July 2010 – April 2011

Analyst - Supplier Intelligence Reports and research by end of 2010

Consultant - Lean Construction and Performance Contract Outline and Guidance – August/ September 2010

Note: Please describe what human resources, internal, external, consultants and/or working groups will be required for the project (please do not include staff that are classed as in kind contributions as they will be covered in section 3.3 below).

### 3.5 In Kind Contributions

| Organization | Contribution | |---------------------------------------------------|-----------------------------------------------------------------------------| | OGC – E-Auctions | Project Manager and construction quantity surveyor circa £40k | | TfL – 3 x Technical Officers | (part time up to April 2013) and use of meeting rooms. | | London Fire Brigade – 1 x Project Sponsor | (part time up to April 2011) | | London Contracts and Supplies Group – East London Solutions | various officers to develop collaborative contracts pre 2013 |

**Note:** Please outline 'in kind' contributions of the partners described in section 2.2 and any other organisations involved. These can include the provision of equipment, office space, meeting rooms, staff or contribution in other ways.

### 4. Project Planning

#### 4.1 What project dependencies were identified during the planning stage?

Is this project on any other project or if any other projects are dependent on this project. If so, how?

None

#### 4.2 What key assumptions were made during the planning stage?

Budgets and staff will be available when needed i.e. there will be phased employment of the Specification and Contracts Staff. Staff will only be employed for a maximum period of 12 months.

In order to achieve the benefits outlined there needs to be a willingness to pursue full collaborative procurement by partners requiring:

- Cooperation
- Trust
- Openness
- Shared standards and objectives
- Use of Common Specifications

Partners will be requested to sign up to a Charter to this effect.

**Note:** Examples of assumptions might be "Budgets and..."

### 4.3 What constraints were identified during the planning stage?

Earliest start date of new pan London Contracts need to be timed with the TfL Contract earliest expiry of April 2013 to ensure a critical mass for the Contracts.

The sub regional contracts would not be Framework contracts due too the restriction of 4 years which is considered to be too short a period for works of this nature (current average contract length is over 6 years)

Buy in by Authorities to pan London Contracts and the use of common specifications.

Describe key constraints identified during the planning phase. Constraints typically include the availability of resources e.g.

- amount of money/staff/equipment available and/or time
- an immoveable deadline such as the start date of the 2012 Olympics.

### 4.4 What is in the scope of this project and what specific exclusions have been identified?

The scope defines what is within the boundaries of the project and what is outside those boundaries, particularly where there may be areas of doubt.

Development and award of sub regional pan London contracts for the provision of Highway Maintenance reactive, cyclic, planned, minor and emergency works.

It does not include for network and asset management, nor with the exception of the e-auction project for the provision of services such as:

Consultancy for Professional Services and Management Services

**Note:** An example could be the introduction of HR shared services which will rationalise Recruitment, Staff Procedures, Terms and Conditions of Employment and Payroll but **NOT** Organisational Development. Clearly, for the avoidance of doubt, it would be appropriate to explicitly state that Organisational Development would not be included in the project.

### 4.5 Key Risks

Please use the table below to outline the key risks identified during the planning process. Key risks should be identified and graded according to likelihood of occurring (Probability – High(H) /Medium (M) or Low (L) and seriousness (Impact – High, Medium or Low). You should also define how risks will be minimised (Mitigating Actions).

| Risk No. | Risk Description | Probability (L/M/H) | Impact (L/M/H) | Mitigating Actions | Responsible Officer | |----------|----------------------------------------------------------------------------------|---------------------|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------| | 1 | Obtaining agreement to standard specification and conditions on contract | H | M | Early discussions to map out scope. Questionnaires have been sent out. Supplier relationship development (SRD), with outputs expected March ’11. Joint resources, specification and contract. London Head of Procurement group are part of the programme. | Project Manager | | 2 | Economic changes and impact of Local Government finances. | M | H | Monitor changes and review programme accordingly. Supplier development relationship | Project Board | | 3 | Lack of buy-in from partners | H | M | Workshops and meetings with practitioners, senior management and chief executives. Seek commitment from chief executives. Effective communications plans. Seek political buy-in. London Head of Procurement group are part of the programme. Newsletter to be uploaded electronically (LoTAG) | Project Board |

### 4.6 Project Key Milestones

Please indicate key milestones for the project in the table below:

| No. | Project Stage or Phase | Key Milestone | Target Completion/Delivery Date | Responsible Office | |-----|------------------------|---------------|---------------------------------|--------------------| | 1 | Supplier Relationship Development | Completion of negotiations with key 2 suppliers of Highway Maintenance activities | May 2011 | Christine Morton/ Philip Snowling (Project Manager) | | 2 | E-Auctions | Electrical Inspection and Testing | May 2011 | Zerrin Lovett | | 3 | E-Auctions | Supply of Materials | May 2012 | Zerrin Lovett | | 4 | Collaborative Contracts | Common Specification | August 2011 | Chris Tunstall | | 5 | Collaborative Contracts | Contract Documentation | March 2012 | Chris Tunstall | | 6 | Collaborative Contracts | Award | January 2013 | Chris Tunstall | | 7 | Pre Collaborative Contracts | Development and award of pre collaborative contracts prior to 2013 | Prior to April 2013 | Chris Tunstall/ East London Solutions |

Please attach a project GANTT chart that clearly shows activities and milestones throughout all phases of the project. 5. Project Controls

5.1 Project Governance

Please provide a diagram showing the proposed governance structure if approved. There should be the minimum of a Project Sponsor, Project Board and Project Manager.

See attached ‘Project Governance’ diagram.

### 5.2 Project Board Controls

Describe how the Project board will exercise its control over the project, referring to the project governance diagram as appropriate.

- **Steering Group Meeting.** Frequency – 3 monthly chaired by the Capital Ambition Programme Sponsor
- **Programme Board Meeting.** Frequency – meets 6 weekly, chaired by the Programme Director
- **Informal Checkpoint Meetings.** Informal checkpoint meetings will be carried out bi weekly between the Programme Manager and Programme Director. Meetings will also be held at least monthly between the Programme Manager and the individual strand project leads.
- **Highlight Reporting.** The Programme Manager will as a minimum give a monthly report to the Programme Board from which an Action Sheet will be prepared and distributed to all Project Board Members. A monthly newsletter will also be distributed to all Authorities and Stakeholders.
- **Escalation.** In the event of a problem arising, the first stage for resolution will be the responsibility of the Programme Manager. If the problem is not resolved at that stage in a timely manner it will be escalated to the Programme Director. Escalations past the Programme Director are the Programme Board and ultimately the Steering Group.

### 5.3 Day-to-Day Controls

Describe how the Project Manager will control the day-to-day running of the project.

- The individual Project Managers will be responsible to the Programme Manager for the day to day control of their projects
- The Programme Manager will be responsible to the Programme Board for ensuring the delivery of the overall Programme.
- A change control procedure will be adopted in accordance with the change control pro forma provided in Capital Ambitions Project Management Pack.

**Note:** Include any formal meetings (e.g. team progress meetings) as well as the informal decision making processes.

### 5.4 Monitoring Procedures

How will the project deliverables, costs and timescales be tracked?

- Each of the Individual projects will have their own project plan which will be monitored by the Project Manager for that Project. These will form part of the overall Programme Master Plan monitored by the Programme Manager and the Programme Board.

The accountable bodies for the financial controls of the projects will be:

- Supplier Relationship Development – London Fire brigade
- E-Auctions – OGC
- Collaborative Contract – TfL

The Programme Board will be responsible for the delivery of the overall Programme and for ensuring costs are retained within budget.

5.5 Project Reporting

Describe what reports will be produced for monitoring and control purposes.

All Projects will commence with a Project Initiation Document.

Monthly highlight reports will be provided by each project manager to the Programme Board and a resultant action log produced for each Programme Board meeting. This will be copied to the Programme Sponsor.

At key milestones an interim report will be provided for the Programme Board and Sponsor in order to agree commencement of the next stage of the project.

A Project Closure Report will be provided for each project and reported to the Programme Board and the Programme Sponsor for sign off.

Note: State the purpose, frequency, who will produce them and who will receive them. As a minimum a monthly highlight report should be completed using the standard Capital Ambition Project Highlight Report template.

### 5.6 Escalation Procedures

If the problem cannot be resolved by the Programme Manager it will be escalated to the Programme Director. Escalations past the Programme Director will be the Programme Board. With final Escalation to the Programme Sponsor and the Steering Group.

Describe the escalation procedures for dealing with deviations from plan, which exceed the authority of:

a) the Project Manager\
b) the Project Board

### 5.7 Risk and Issues Management

A full Risk and Issues log is maintained with the top 5 risks reviewed monthly and the full log quarterly. See attached ‘Risk and Issues Log’

**Note:** You should maintain a full risk and issues log which Capital Ambition can ask to see at any time during the lifecycle of the project. A template is available from the Capital Ambition Programme Management Office.

### 5.8 Measures of Success

Please describe the measure(s) that will be used to indicate that the project has been successfully completed.

- E- Auctions looking for at least a 10% saving on the overall estimated value of work/material.
- Supplier Relationship Development – target to reduce cost base by a minimum of 5% working with contractors.
- Production and award of common Specification and Contract.
- Savings of at least 10% when procured through the pan London contract.

**Note:** Each measure should be linked to one or more target outcomes. At the end of the project the measures will help answer such questions as ‘what have we achieved?’.

### 5.9 Communications Strategy

How you will be managing project communications throughout the lifecycle of the project?

See attached ‘Communications Plan’

**Note:** You should describe what communications will take place, to whom i.e. Stakeholders. Please attach an outline communications plan.

### 5.10 Lesson Learned

From the monthly highlight reports, the resultant action logs and milestone reports, a lessons learned log will be developed and maintained and incorporated into the Final Project Closure Reports.

All the documents and reports will be available on the website and any updates drawn to all partners attention

Note: Capital Ambition requires that you keep a lessons learned log to be shared with others who may run similar projects in the future. You will be asked to complete a project closure report including lessons learned, and may be asked to present your learning as the project develops.

5.11 Partner Authorisation

Please indicate approval and acceptance of this proposal by the Project Board and Partner organisations participating in this project.

| No. | Organisation Represented | Name | Signature | Date | |-----|---------------------------|-----------------------|-----------|------| | 1 | TfL | Dana Skelley | | | | 2 | LoTAG | Martin Sachs | | | | 3 | OGC | Zerrin Lovett | | | | 4 | London Contracts and Supplies Group | Dave Starling | | | | 5 | London Fire Brigade | Mark Atkinson | | | | 6 | London Borough of Enfield | Steven Skinner | | | | 7 | London Borough of Lambeth | Martin Sachs | | | | 8 | London Borough of Hammersmith and Fulham | Gordon Prangnell | | | | 9 | London Borough of Newham | Paul Rogers | | |

Thank you for completing this proposal.

We are happy to receive a copy by email to the Capital Ambition Programme Management Office – CA-PMO@londoncouncils.gov.uk

Please sign and send hard copy to (and for further information): Capital Ambition Programme Management Office Capital Ambition London Councils 59½ Southwark Street London SE1 0AL

Signed…………………………………………………………………………Date………………………………

Print Name Chris Tunstall Position Programme Manager

Before submission please ensure this proposal has the support of the Chief Executives of all joint-proposers, and where appropriate Elected Members.

## Transforming London Highways Maintenance

### PID Cashable Savings

| Contracts | Contract Value and Saving £million/ year | |-----------|-----------------------------------------| | | TfL | borough | total cum | saving 5% | saving 10% | saving 15% | | 2010 | 6 | 20.3 | 20.3 | | | | | 2011 | 16 | 54.1 | 74.4 | | | | | 2012 | 10 | 33.8 | 108.2 | | | | | 2013 | 9 | 100 | 20.3 | 120.3 | 6.01 | 12.03 | 18.05 | | 2014 | 17 | 100 | 57.5 | 177.8 | 8.89 | 17.78 | 26.67 | | 2015 | 1 | 100 | 3.4 | 181.2 | 9.06 | 18.12 | 27.18 | | 2016 | 3 | 100 | 10.1 | 191.3 | 9.57 | 19.13 | 28.7 | | 2017 | 6 | 100 | 20.3 | 211.6 | 10.58 | 21.16 | 31.74 | | 2018 | 0 | 100 | 0 | 211.6 | 10.58 | 21.16 | 31.74 | | 2019 | 1 | 100 | 3.4 | 215 | 10.75 | 21.5 | 32.25 | | 2020 | 2 | 100 | 6.8 | 221.8 | 11.09 | 22.18 | 33.27 | | 2021 new contract | 100 | 230 | 330 | 16.5 | 33 | 49.5 |

### Key Activities and Milestones

| Activity | 2010 | 2011 | 2012 | 2013 | |-----------------------------------------------|------|------|------|------| | Supplier Relationship Development | | | | | | Preparation of E auctions | | | | | | Electrical testing | | | | | | Material supply | | | | | | Analysis of Current Management Systems | | | | | | Standard Specification Development | | | | | | Standard Contract Documentation | | | | | | OJEU, ITT, Review and Award | | | | | | Contract Mobilisation | | | | | | Contract Start | | | | | | No | Category | Risk | Mitigating Measure | Impact | Likelihood | Gross Risk | Net Risk | Action By | Action By Date | Mitigation in place? | |----|----------|------|-------------------|--------|------------|------------|----------|-----------|---------------|-------------------|-------------------| | 1 | Delivery Partners | Ambition/Project specification and conditions on contract | Supplier development relationship | 5 | 4 | 20 | 3 | 12 | Capital Ambition | 12/07/2010 | Yes | | 2 | General Threats | Economic changes that result in local government finance | Supplier development relationship | 5 | 5 | 25 | 3 | 15 | Project Board | | | | 3 | Delivery Partners | Lack of buy-in from partners | Supplier development relationship | 5 | 5 | 25 | 3 | 15 | Project Board | | | | 4 | Legal | Legal changes to supplier | Supplier development relationship | 3 | 5 | 15 | 3 | 9 | Project Board | | | | 5 | Strategy and Leadership | Any party involved in a tender to provide resources to project competes | Information resources to stakeholders | 4 | 3 | 12 | 3 | 8 | Project Board | | | | 6 | Supply Chain Management | Agreed engagement of suppliers to be maintained during programme | Communications plan redistributed | 4 | 4 | 16 | 4 | 2 | Project Board | | | | 7 | General Threats | Organisational changes that result in unanticipated changes to the availability of work | Supplier development relationship | 5 | 2 | 10 | 3 | 2 | Project Board | | | | 8 | Supply Chain Management | Excess of work | Supplier development relationship | 4 | 4 | 16 | 3 | 2 | Project Board | | | | 9 | Delivery Partners | Not achieving lower costs due to lack of volume | Seek commitment from chief executives | 4 | 3 | 12 | 3 | 6 | Project Board | | | | 10 | Delivery Partners | Missing key to | Supplier development relationship | 5 | 3 | 15 | 3 | 9 | Project Board | | | | 11 | People & Skills | Critical staff resources are not available when needed to fully develop the programme and to ensure the programme and its delivery is successful | Supplier development relationship | 5 | 3 | 15 | 3 | 9 | Project Board | | | | 12 | Financial | Excess of savings to be made | Supplier development relationship | 5 | 2 | 10 | 3 | 5 | Project Board | | | | 13 | People & Skills | Critical staff resources are not available when needed to fully develop the programme and to ensure the programme and its delivery is successful | Supplier development relationship | 5 | 3 | 15 | 3 | 9 | Project Board | | | | 14 | Operations, facilities and systems | Operations are not in place to support the programme with existing systems | Supplier development relationship | 3 | 4 | 12 | 2 | 4 | Project Board | | | | 15 | Supply Chain Management | Supply chain management is not in place to support the programme with existing systems | Supplier development relationship | 3 | 3 | 9 | 2 | 2 | Project Board | | | | 16 | Supply Chain Management | Supplier development relationship | Supplier development relationship | 3 | 2 | 6 | 2 | 2 | Project Board | | | | 17 | Strategy and Leadership | Strategy and enabling | Supplier development relationship | 3 | 3 | 9 | 2 | 2 | Project Board | | | | 18 | Financial | Excess of savings to be made | Supplier development relationship | 4 | 2 | 8 | 2 | 2 | Project Board | | |

**Pan London Collaborative Works Programme - Risk Register**

**Assessment of Inherent Risk**

- **Impact**: 1 (Low), 2 (Moderate), 3 (High), 4 (Very High)
- **Likelihood**: 1 (Low), 2 (Moderate), 3 (High), 4 (Very High)
- **Gross Risk**: Impact x Likelihood
- **Net Risk**: Gross Risk - Mitigation

**Assessment of Residual Risk**

- **Current Action & Status**: Action By Date
- **Action By Date**: Date when the action is expected to be completed
- **Mitigation in place?**: Yes/No

**Comments**

- **RAG**: Red (High), Amber (Medium), Green (Low)
- **RAG Comments**: Details of the mitigation measures and their effectiveness

______________________________________________________________________

**Notes**

- **Risks and Issues Register (June 2010)\_v01a(1)**
- **Risk Register Page 1/1**

______________________________________________________________________

**Item 5 Appendix Biii** Transforming London Highways Maintenance Governance Arrangements

Executive Steering Group Chair - CA Capital Ambition Programme Director Programme Manager LoTAG - Joint Chair Capital Ambition Nominee

Programme Board Chair - Programme Director Programme Manager SRD Lead OGC Lead TfL Representative LoTAG Representative x 4 TfL Procurement London Contract & Supplies Group London Society of Treasurers

Programme Manager

| E-Auctions | SRD | Pre 2013 Collaborative Contracts | Collaborative Contracts | |------------|-----|---------------------------------|-------------------------| | OGC Project Manager | Project Manager | East London Solutions | Project Manager | Pan London Collaborative Highway Works

Marketing and Communications Strategy

2010/2013 Pan London Collaborative Highway Works

Marketing and Communication Strategy 2010 – 2013

Strategic Marketing Communications Aims

- To raise awareness of the Pan London Collaborative Highway Works Programme throughout the Local Government Community in London.
- To encourage Highways Partnership working throughout London
- To ensure other key partners such as Capital Ambition, OGC, DfT, HELG Etc are kept fully informed of the progress of the programme
- To communicate the programme nationally to other REIPs and local authorities
- To ensure Key suppliers and supplier trade organisations are kept informed of the aims and objectives of the programme and its progress

Background

London Boroughs, the City of London and TfL between them spend over £400m per annum on highways related spend (excluding TfL’s Capital works), £300m of which is works costs procured through a wide range of contracts based on geographic area, network type and activity.

Recent work carried out through LoTAG by TfL, OGC, Capital Ambition and London Councils has demonstrated that opportunities exist for considerable savings to be realised by:

- The coordination / aggregation of contracts
- The consolidation of diverse specification
- Common unit costs available to Boroughs and TfL

Currently there are over 100 individual maintenance contracts being managed by the Boroughs, City of London and TfL with an annual spend ranging from between £40k to £30m. Contract preparation alone is estimated to cost London approximately £15m per 6 year period. It has been estimated that a Pan London umbrella contract divided into 5 sub-regional areas with common specifications would cost £750k to develop.

Although across London, there are over 100 contracts, 5 contractors have over 50% of the contracts and 80% of the value and 2 contractors have over 50% of the Borough’s work (in monetary terms). One contractor has contracts in at least 13 Boroughs.

The range of unit prices, even from the same contractor, for similar activities is considerable, reasons for this are considered to be due to differing specification requirements from individual Boroughs, the quantity of work and the ability of the Boroughs to provide the contractor with robust forward programmes. Supplier relationship development work, led by Capital Ambition, is currently underway to investigate this further.

The purchasing power of contractors which will allow lower unit rates is related to the quantity and commonality of the materials they need to procure. As part of the ongoing development of the collaborative contract, the OGC is to lead on an e-auction process that will enable contractors to choose the most financially advantageous supplier for the procurement of materials.

**Marketing and Communications Context**

The Strategy concentrates on bringing together the various strands of the Programme to ensure its maximum potential is communicated to local authorities in order to maximise take up and potential savings.

**Marketing and Communications Objectives**

- To ensure the programmes key messages and objectives on a regular and programmed basis to ensure maximum impact
- To ensure suppliers of highway works and their trade organisations are kept fully briefed as to the progress of the programme
- To consult and engage local authorities, affected agencies and suppliers and their trade organisations in order to continually develop and monitor the effectiveness of the programme and the communications strategy
- To raise the profile of the programme nationally
- To ensure that all documentation and related publications are made available on the LoTAG shared website
- To provide and promote positive publicity around the programme

**Stakeholders and Partner Agencies**

Local Authorities • Highway Managers • Directors responsible for Highway Service • Directors of Finance • Heads of Procurement • Chief Executives • Members • 4 x sub regional procurement partnerships

Other Agencies such as

• Capital Ambition • OGC • DfT • Highways Agency

Other

• Key Suppliers of Highway Works • Supplier bodies such as htma • National REIPs • HELG • The media

Marketing Communications Tools

In order to achieve the marketing and communications objectives the following tools and methods will be used:

• Events • Presentation • Briefings • Newsletter • Press and media • Printed information • LoTAG Shared info website • Research and best practice from other regions/ authorities

Communication Plan

• **Newsletter** A quarterly newsletter identifying progress and achievements to date will be produced and distributed to all Boroughs and Partner Agencies.

• **E-mail Bulletins** Specific ad hoc e-mail bulletins will be circulated in respect of key issues arising from the programme and its various strands.

- **Briefing Papers** Briefing papers will be produced and distributed on completion of specific milestones and on specific request.

- **Shared Website** All documentation circulated will also be made available on the shared LoTAG Website.

- **Presentations** Presentations will be prepared and delivered to interested groups or made available for deliver by others.

- **Publicity/Marketing** Publicity and Marketing material will be produced to raise the profile and awareness of the programme and its various strands. **Project/Subject:** Collaborative Procurement for Passenger Carrier Transport

**Report by:** Rachel Clark, City of Westminster

**Email:** rclark2@westminster.gov.uk

**Agenda item:** 6

**Strategic Theme:**

**Purpose:** To consider a request for funding of £237,875 over three years for the development and procurement in 2011 of a joint best practice and reduced cost and carbon emissions Passenger Carrier Transport service, that will align with the development of the London Council's pan-London Door-to-Door Strategy. It is anticipated that the joint procurement will achieve cashable savings of at least 5% (£285k) in the first year and will increase significantly as other councils use the new contract.

### Financial implications 2010/11:

#### Revenue Funding

| Financial Year | Existing Project Approval | Committed/Spend In Year Total | Balance | New Funding Request | Total Existing Approval + New Funding Request | |----------------|---------------------------|-------------------------------|---------|---------------------|---------------------------------------------| | 2010/11 | 0 | | 163,238 | | 163,238 | | 2011/12 | 0 | | 69,637 | | 69,637 | | 2012-13 | 0 | | 5,000\* | | 5,000\* | | **Total** | | | | | |

#### Capital Funding

| Financial Year | Existing Project Approval | Committed/Spend In Year Total | Balance | New Funding Request | Total Existing Approval + New Funding Request | |----------------|---------------------------|-------------------------------|---------|---------------------|---------------------------------------------| | N/A | N/A | N/A | N/A | N/A | N/A | | **Total** | | | | | |

**Revenue and Capital Total** 237,875

*Legal estimate to cover other LAs joining the PCT arrangements included in total.* Executive summary:

The project will involve a joint scoping, specification development and procurement process for Passenger Carrier Transport Services which will allow efficiencies and subsequent cost and Carbon emission reductions.

The key objective is to establish an arrangement that is procured under OJEU initially by Westminster City Council and the London Borough of Hammersmith and Fulham, and is accessible to all other London local authorities with initial interest expressed from RBKC who may join following expiry of their existing arrangements. The benefits of doing so are to:

1. Share procurement effort and cost to reduce overall service costs and carbon emissions.
2. To enable further work as part of a pilot for the Transport Door-to-Door Strategy.

It is recommended that in order to facilitate a procurement that would incentivise and enable further staged benefits for other Local Authorities to join, additional resources are required to enable this over and above existing resource commitments from WCC and LBHF.

The key risks to this project are delays to the programme and the associated benefits realisation which is also mitigated by the additional resources to be recruited to support the project (subject to the CA funding approval).

The Head of Mobility for London Councils has reviewed this proposal and submitted the following comment:

“We support the funding of the City of Westminster/Hammersmith and Fulham joint procurement proposal because it seems to offer a learning opportunity given that large scale procurement has the potential to deliver economies of scale. It is quite possible that the project could be one of a number of pilots that the London Councils’ door-to-door project will need to inform its decisions. This proposal appears consistent with the bigger vision we are trying to develop on door to door transport, but does not substitute for what we are doing”

Risk: Delays to programme timing as a result of complexities arising from joint procurement and engagement process with RBKC other Local Authorities to include requirements.

Recommendations:

That the Board approves a request for funding of £237,875 over three years for the development and procurement in 2011 of a joint best practice and reduced cost and carbon emissions Passenger Carrier Transport service, initially for West London authorities but to be available to all London councils, that will align with the development of the London Council’s pan-London Door-to-Door Strategy.

Appendices:

Appendix A: Project initiation document Appendix B: Mietool output summary

Background papers:

- Expression of Interest
- LBHF and WCC Joint Paper
- WCC Cabinet Member Paper – Joint procurement with London Borough of Hammersmith and Fulham for the SEN transport Services Collaborative Procurement: Passenger Transport Services and Vehicles

Lead Authority: Westminster City Council partnered with London Borough of Hammersmith & Fulham

Project Sponsor: Cllr. Nicola Aiken (WCC) & Cllr Helen Binmore (LBHF)

Project Manager: tbc pending BA bid approval

Project Manager Contact Details: Rachel Clark (WCC) & John Francis (LBHF)

Date: 28 June 2010

Project Start date: March 2010

Project End Date: January 2012

Please note: Capital Ambition does not support projects that benefit single authorities. Proposals should usually be joint submissions or be submitted by a lead partner on behalf of others. In exceptional circumstances Capital Ambition may support a bid but it must demonstrate specifically the value of outcomes and learning and how it can then be transferred to other organisations.

Template Revision History

| Version | Created | Reasons for/Summary of Changes | Author | |---------|-----------|---------------------------------------------------------------------|--------------| | 1 | 24/6/2010 | Joint draft developed – WCC & LBHF | RC/WS/JF/LG | | 2 | 30/6/2010 | Consolidated comments LBHF & WCC | RC/JF/WS | | 3 | 30/6/2010 | Update on financial breakdown by quarter and resource timing | LG/RC |

## 1. Project Overview

### 1.1 Title

Collaborative Procurement: Passenger Transport Services and Vehicles

### 1.2 Project Summary (Maximum 100 words)

A joint procurement between Westminster City and Hammersmith & Fulham Councils for passenger transport services for vulnerable residents; primarily, home to school transport for children with special educational needs and home to day centre transport for disabled adults. The successful contractor will source all vehicles needed to deliver these services in both boroughs. It is intended that the contract will allow other authorities to join at a later date, should they wish to do so, via an access agreement thereby delivering further shared economies and efficiencies through discounted prices.

### 1.3 Partner organisations involved in the submission of this bid

- Westminster City Council
- London Borough of Hammersmith & Fulham
- Royal Borough of Kensington & Chelsea
- West London Alliance

### 1.4 Project Aim (Maximum 30 words)

To:

- improve vfm of transport service services to vulnerable residents;
- maintain an important front-line service, during economic austerity;
- deliver significant savings;
- develop capacity for further collaborative procurement;
- reduce carbon footprints.

### 1.5 Project Objective(s)

Objectives should be measurable and outline the activities you will undertake and the services you will offer to deliver the aim. Each objective should be a one sentence statement, or a number of statements starting with the word ‘to’

- To award the contract in 2011 to a lead contractor at a reduced cost for both boroughs, which will allow neighbouring Councils to join and benefit from aggregated price discounts.
- To start the service for 400 children from WCC and LBHF from the beginning of the autumn term 2011.
- To start the service for 120 adults from LBHF on 1 September 2011, and then look to migrate a further 162 adults from WCC when existing contracts expire.
- To establish customer satisfaction baselines prior to contract, monitor and improve via annual survey post-contract from 2011/2012.
- To achieve cashable budget savings of at least 5% (£285k) in year 1 and further cashable savings in subsequent years as fuller integration is achieved.
- To reduce unit costs of the service for both adults and childrens services.
- To set up a joint client monitoring unit by 1 September 2011 to deliver further savings to both boroughs.
- To identify and optimise opportunities for better sharing and rationalisation of assets, such as depots. • To have RBKC to join the contract in 2012-13, and other west London authorities when their existing contractual arrangements expire. • To identify and share lessons learned with all London Boroughs in the period January to March 2012, principally through a case study document. • To pump prime future collaborative arrangements between WCC, LBHF and other central and west London councils; for instance, through a progressive coalition of shared services across other functions. • To reduce year-on-year the number of total vehicle journeys across the two boroughs, and across others that subsequently join the contract, to reduce the carbon footprint and other adverse environmental impacts.

### 1.6 Is this bid for funding linked to a previous bid or for work delivered in an earlier phase?

| No |

### 1.7 Business and Policy Context

Passenger transport is an important front-line service to vulnerable groups of residents. There is a statutory obligation to ensure that pupils with statements of Special Education Needs, and certain groups of adults with difficulties are supported in gaining access to education and aspects of social care.

LBHF has a council-wide market testing programme, of which passenger transport services is a part. LBHF’s passenger transport services are currently delivered directly, in-house. As there will not be an in-house bid, the tendering will result in outsourcing, with a transfer of the service, its drivers and escorts to an external provider. LBHF want to award the new contract March-April 2011, giving the successful contractor sufficient time to mobilise their resources, source the specialist vehicles, and oversee the TUPE transfer, before commencing the contract in September 2011 at the start of the new school year.

WCC wishes to procure these services jointly with LBHF. The provision of escorts and drivers for WCC’s passenger transport has been outsourced for the some time, and is currently managed on their behalf under their Customer Services Initiative contract.

Both Councils, along with others, are facing radical retrenchment. Both Councils want to maintain, and wherever possible improve, this important front-line service to vulnerable residents in the face of this retrenchment. Both Councils believe that the best way of achieving these objectives – of protecting front-line services whilst delivering savings - is to work collaboratively. Both Councils want to optimise the economic, social and environmental benefits of wider collaboration by leaving the door open for other councils to join at a later date – to deliver more for less.

RBKC wish to have the option of joining this contract when their current arrangement expires. This will form an even more cohesive and economic bloc, and enhance the level of benefits resulting from the project.

This is a pathfinder project. Despite Government promptings dating back to Gershon, the possibility of grant aid from Capital Ambition, and economic circumstances, very few front-line services have been procured jointly to date. The rewards of collaborative procurement are greater, but the journey can take longer and require careful navigation. WCC and LBHF recognise the importance of doing, and of sharing these lessons with others.

### 1.8 Funding Requested

| Total Project Cost (£) | Amount of REVENUE Funding Requested from CA (£) | Amount of CAPITAL Funding Requested from CA (£) | Total Funding Requested | |------------------------|-----------------------------------------------|-----------------------------------------------|-------------------------| | £ (existing resources as per Mietool) | £237,875, | £0 | £237,875 |

Total cost plus the amount of funding requested from Capital Ambition. Further details will be needed in Section 3.

### 1.9 Summary of Benefits by Type

Please tick one or more types of benefit that your project will deliver. You will have the opportunity to expand further in section 2.6

| Benefit Type | Tick as Appropriate | |--------------|---------------------| | Cash Savings | ✓ | | Efficiency Gains | ✓ | | Cost Avoidance | ✓ | | Capacity Building | ✓ | | Performance Improvement | ✓ | | Customer Satisfaction | ✓ | | Other (Sustainability / Collaboration) | ✓ | 2. Project Detail

2.1 How does the proposed project address one or (or more) of Capital Ambition’s themes and funding priorities?

By working collaboratively, pooling budgets and purchasing power (and possibly assets such as depot facilities) the project will give effect to:

- **Delivering together**, through joint procurement and development of a shared joined-up service and client-side organisation across Councils.
- **Developing capacity**, by enhancing practical skills and experience of undertaking joint procurement within the two lead Boroughs, and then sharing this across London to help inform future collaborative exercises.
- **National Indicator 179**, through on-going value for money and cash-releasable gains.
- **Capital Ambition’s London Procurement Strategy**, by co-ordinating purchases, combining contracts, sharing resources and by thinking and acting sub-regionally (with the support of the WLA).
- **Local Area Agreements** on reducing carbon footprints. Aggregating demand should result in fewer overall journeys across boroughs, along with a reduction in other adverse environmental impacts.

2.2 Who are the partners directly involved in running the project and what will they contribute to its success?

| Please List partners: | How will they contribute to the success of this project? | |-----------------------|--------------------------------------------------------| | London Borough of Hammersmith & Fulham | Both are committed to delivering a successful joint procurement. Both partners are providing sponsorship, leadership and staff resources to work on the project. | | Westminster City Council | | | Royal Borough of Kensington & Chelsea | Has indicated a wish to be named on the OJEU giving them the option of joining the contract when their current arrangements expire, and are currently discussing with LBHF the potential for a future shared service. | | West London Alliance (WLA) | Whilst a wider joint procurement of passenger transport services within the WLA is not possible at this time, due to existing contractual arrangements, it remains a long term objective of the WLA to travel in the direction of a shared solution. The WLA – via it’s Director, Ian Nichol – will play an important partnership role in promoting and facilitating take-up amongst WLA members of the option to joining the LBHF – Westminster contract, and in the aligning of this contract with any future wider WLA joint procurement which has potential to feed into the development of a regional transport hub. | | The Carbon Trust | Has expressed support for the project through the current Low Carbon procurement pilot being undertaken with Westminster CC. | given the project’s potential to result in a lower carbon footprint via aggregated demand resulting in fewer overall journeys across boroughs.

### 2.3 What are the intended outcomes of this project?

When considering intended outcomes, you need to ask the question ‘What changes or effects should come about as a result of the project?’. Outcome statements typically start with words such as improved, increased, enhanced and reduced.

| Outcome No. | Outcome Description | |-------------|---------------------| | 1 | **Reduced costs** by aggregating demand across boroughs, resulting in higher overall volume, lower numbers of vehicle journeys and cashable in-year savings, followed by further savings resulting from more integrated and rationalised client-side arrangements. The OJEU will allow other neighbouring Councils to access the contract. As and when they join, the level of cashable savings (and price discounts) will increase. | | 2 | **Increased flexibility and efficiency** through better resource utilisation and deployment within and between Westminster and Hammersmith & Fulham, and others sub-regionally should they join when their current contractual obligations expire. | | 3 | **Improved customer satisfaction** through continuation of good quality services where there is high level of dependency amongst vulnerable residents, their families and carers. | | 4 | **Reduced environmental impacts** with aggregated demand resulting in fewer vehicle journeys, a reduction in emissions and other adverse impacts. A lower carbon footprint. | | 5 | **Increased collaborative working** with this project being at the forefront of a wider coalition of shared services between WCC, LBHF and RBKC. | | 6 | **Improved capacity for joint procurement** within WCC and LBHF, learnt by doing, that can support future collaborative contracts. | | 8 | **Dissemination of lessons learnt** via a case study that can be shared across London (and inform London Council's Door-to-Door Transport Strategy) to drive efficiency, make savings and improve services for users during a period of economic retrenchment. |

### 2.4 What outputs will the project deliver?

Outputs (sometimes called ‘deliverables’) are tangible things that are to be delivered by the project e.g. toolkit, procedure manual, training strategy. Project phases are typically initiation, planning, execution and closure.

| No. | Project Stage or Phase | Description of Output | Target Completion/Delivery Date | Which outcome is this output (s) linked to? | |-----|------------------------|------------------------|---------------------------------|------------------------------------------| | 1 | Initiation | Project governance processes and documents in place | August 2010 | 1-8 | | 2 | Planning | Business case signed off | August 2010 | 1 | | 3 | Planning | Scoping options paper | August 2010 | | | 4 | Planning | Recommendation paper | August 2010 | 1-8 | | 5 | Planning | Approved Pre Qualification Questionnaire (PQQ) | August 2010 | 1-8 | | 6 | Planning | SRM identified /ownership of service agreed | September 2010 | 1-8 | | 6 | Planning | Smart SLA’s and KPI’s agreed and documented | September 2010 | 3 | | 7 | Planning | Approved Invitation to Tender (ITT) | October 2010 | 1-8 | | 8 | Execution | ITT responses from selected bidders | December 2010 | 1-7 | | 9 | Execution | Supplier selection process completed and successful supplier informed | December 2010 | 1-7 | | 2 | Execution | Service commences in line with agreed SLA’s | From September 2011 | 3 | | 3 | Closure | Contract management process commences and service reports issues | From September 2011 | 1-8 | | 4 | Closure | Benefits tracking reporting commences | From September 2011 | 1 | | 5 | Closure | Reports issued to neighbouring Authorities to facilitate adding them to the agreement | From September 2011 | 5 | | 6 | Closure | Report issued from Carbon Trust detailing impact of the new service on the carbon footprint | From September 2011 | 4 | | 7 | Closure | Lessons learn document issued | From September 2011 | 8 | 2.5 How will outputs be rolled out beyond partners that are participating in the project?

Please describe how each of the outputs described above will be circulated, marketed and implemented externally.

| Output No. | Roll out strategy | |------------|-------------------| | 1 | Critical lessons learnt, which have potential implications for other collaborative procurements across London, will be escalated to Capital Ambition as they arise for immediate dissemination within existing CA media. These will be highlighted in monthly project progress reports to CA. | | 2 | Regular updates will be posted to the WLA for dissemination through existing sub-regional media. | | 3 | On project completion, a Case Study and Lessons Learnt report will be produced for dissemination via Capital Ambition, London Councils and any other relevant bodies concerned with promoting collaborative procurement and shared services. This will be supported by presentations to and Q&A sessions with CA and LC fora should CA wish. | | 4 | Following completion of the Case Study, WCC and LBHF are willing to host an Open Day for other Councils and public bodies, if the demand exists. | | 5 | Promotion of the project – its approach, outcomes, and Capital Ambition’s role in supporting – in the local government, regional and national press, | | 6 | Responding to on-going ad hoc requests for information on the project, supported by despatch of the case study. | | 7 | Promotion of the project when relevant at other local government and/or procurement events, conferences, seminars etc. as the need/opportunity arises. |

2.6 What benefits are sought from running this project?

We need to understand what benefits are sought by running this project. You should complete the table below and be specific in terms cash savings (what, how much over what period?), efficiency gains (how, impact?), Cost avoidance (what, how much over what period?) and Capacity Building. The headings shown below are not exhaustive and addition headings can be added where necessary.

| Benefit Heading | Description (what benefits?, how much?, over what period?, impact?) | |-----------------|-------------------------------------------------------------------| | Cash Savings\* | As shown in Mietool. | | Efficiency Gains| Single procurement costs for client and contractor compared to two procurement processes; vehicles used more efficiently across boroughs; single client-side management costs. | | Cost Avoidance | Client and contractor both avoid duplication of procurement costs due to a single process and client (LBHF/WCC); also avoid duplication of client side costs. | |--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Capacity Building | Staff knowledge and experience of collaborative procurement; able to roll-out and use in future procurement of shared services. | | Performance Improvement | Opportunity to develop methods to reduce journey times for vulnerable young people; to standardise eligibility criteria and performance standards across boroughs; and to align the project with the development of London Council's pan-London Door-to-Door strategy. | | Customer Satisfaction | Maintain standards for vulnerable residents at a time of economic austerity, likely to be over the whole duration of the contract. | | Other | A larger contract, with economies of scale that external providers enjoy, should offer a number of CPD opportunities for operational staff, including improved training and inward promotion. Economic and environmental benefits should accrue from more efficient journey sharing across boroughs for longer trips, including those to specialist schools outside London. |

\*We require clear information about projected return on investment for projects that claim to deliver efficiency savings. Please use mietool (or a robust equivalent) to support your savings estimates, and provide the supporting documentation. If you do not have any mietool trained staff, please see the following website for further details. [http://www.londoncouncils.gov.uk/capitalambition/resourcesandperformance/bpcasestudies/mietool.htm](http://www.londoncouncils.gov.uk/capitalambition/resourcesandperformance/bpcasestudies/mietool.htm) 2.7 What is the Equalities Impact of this project?

A Predictive Equalities Impact Assessment has been carried out. Home-to-school transport for children with SEN and home-to-day centre transport for disabled adults are both statutory provisions, with high levels of dependency for the disabled children and adults who rely on it, their families and carers.

Key stakeholders in this project include:

- Young People with Special Education Needs, and their carers and families.
- Adults with Mobility and Other difficulties, and their carers and families.
- Schools that pupils with SEN attend – Special and mainstream schools.
- Day centres that disabled adults attend.
- Staff providing the service, many of whom are part-time employees.

The primary purpose of the service is to enable access to education for children or young people with special education needs, and thereby improve their quality of life and empower them to reach a more independent adulthood.

Similarly, the same service allows vulnerable elders access to regular day care provision. The latter will ensure they receive medical support, their nutritional needs are met and they have access to daily social interaction with their peers and others.

A key aim of the project is to protect and enhance these aspects that support equality of opportunity to life chances; by working collaboratively across boroughs, pooling budgets, scarce resources and capacity to maintain this important front-line service and the difference it makes to peoples lives. 2.8 Legacy planning – What is the legacy of this project?

Please describe how will the work undertaken during the running of this project will be sustained or carried on once the project has been completed.

The key to ensuring that the contract delivers the anticipated benefits and required service will be the Supplier Relationship Management activity (SRM). The key areas that the SRM will manage are:

- Regular meeting with supplier to review the MI detailing service performance
- Benefits tracking reporting and cost management
- Issue/risk management
- Tracking and reporting the environmental benefit
- Innovation – including working with other councils to join up to the service
- Supplier audit
- Change management

In addition to the SRM activity:

To encourage and facilitate further collaboration an information pack will be made available to other councils containing key information, including but not limited to:

- Tender documentation and information
- Pricing information
- Service information

3. Project Resourcing

3.1 Have you secured or are you seeking match funding for this project? Yes/No If yes, please complete details of match funders in the table below:

| Funder | Amount (£) | Is Funding Secured? | Decision Date (if not secured) | |--------|------------|---------------------|-------------------------------| | None | | | |

3.2 What is the anticipated CAPITAL spend profile of funding requested from Capital Ambition?

| Year | Quarter 1 (£) | Quarter 2 (£) | Quarter 3 (£) | Quarter 4 (£) | Total (£) | |------|---------------|---------------|---------------|---------------|-----------| | 1 | 0 | 0 | 0 | 0 | 0 | | 2 | 0 | 0 | 0 | 0 | 0 | | Total| 0 | 0 | 0 | 0 | 0 |

3.3 What is the anticipated REVENUE spend profile of funding requested from Capital Ambition?

| Year | Quarter 1 (£) | Quarter 2 (£) | Quarter 3 (£) | Quarter 4 (£) | Total (£) | |------|---------------|---------------|---------------|---------------|-----------| | 1 | 0 | 33,925 | 64,656 | 64,656 | 163,238 | | 2 | 39,012 | 30,625 | 0 | 0 | 69,637 | | Total| 39,012 | 64,550 | 64,656 | 64,656 | 232,875\* |

As per Mietool £5,000 in legal costs is set aside for subsequent local authorities to join the procurement arrangement. Needs to reconcile to 1.8 and Mietool? 3.4 Project Staffing

Resource will be fundamental to the success of this project. Due to the collaborative and pathfinding nature it is going to be essential to have dedicated members of the project team to ensure each council’s requirements are met throughout the project. In order to develop a contract that supports the collaboration and allows for future expansion the Legal support required will be extensive.

The financial support is requested for 3 roles, plus Legal support.

**Project Manager 23/7/2010 to 30/9/2011 (1.2 FTE)**

- Ensure that the correct Governance processes are followed within each council (each process being different)
- Identify, track manage and resolve project issues
- Produce all required project documentation and distribute to all stakeholders
- Identify, manage and mitigate project risks
- Ensure that the recommended solution is acceptable to all stakeholders within both councils
- Manage the scope to ensure that only what has been agreed, is delivered, unless changes are approved through change management
- Weekly reporting on project progress
- Ensure work is assigned and completed on time and within budget
- Produce and distribute lessons learnt documentation and case study.

**Transport Procurement Specialist 1/10/2010 to 30/5/2011 (0.9 FTE)**

- Advise on best practice
- Act as subject matter expert
- Inform and make recommendations following data collection
- Produce options analysis and recommendations
- Develop evaluation criteria for ITT
- Lead evaluation of tender process
- Advise on and support the process of integration towards a fully shared service.

**Data Analyst 23/7/2010 to 6/4/2011 (0.7 FTE)**

- Identify data requirements
- Gather data on current costs and processes across all potential councils that may join the end solution
- Complete analysis on the data
- Develop options analysis for different solutions and scope
- Help to define acceptance criteria for completion of the solution

**Existing internal resources** being committed by both Councils are:

- Rachel Clark, Procurement Manager – WCC
- Liza Gugliotti, Procurement Manager WCC (reducing over 1 month)
- Jacqueline Scott, Legal Services, LBHF
- John Francis, Procurement Officer, LBHF

### 3.5 In kind contributions

A high level sponsor and an executive level sponsor from each borough, Strategic Review Team with membership from each borough meeting regularly, including meeting room and travel), specialist expertise in respect of finance and HR.

### 4. Project Planning

#### 4.1 What project dependencies were identified during the planning stage?

Is this project on any other project or if any other projects are dependent on this project. If so, how?

None.

#### 4.2 What key assumptions were made during the planning stage?

That:

- Data that savings are based on is correct
- A joint contract will enable the respective services to be delivered at less than current cost (£6m).
- The project has realistic and feasible timescales.
- The statutory requirement to transport children with SEN and vulnerable adults will continue.
- That children's SEN volumes will remain constant, whilst the uncertainties surrounding the introduction of Self Directed Care for adults will require innovative solutions and engagement with the market.
- The joint procurement is commercially viable.
- There is market interest and capacity, already tested via provider events and dialogue.
- Staff resources will be available when needed.
- Legal issues and other (eg cultural or structural) barriers to collaboration will be overcome due to clear Leadership expectations on a successful outcome.
- The external posts for which funding support is being sought (Project manager, transport procurement specialist and business support posts) can be filled by 1 October.
- Financial resources are available to support the procurement.

#### 4.3 What constraints were identified during the planning stage?

Requirement to start service for children with SEN at start of autumn term 2010, or need to move in half term chunks

Financial support from Capital Ambition is available to support the additional resources required due to the pathfinder nature of the project. 4.4 What is in the scope of this project and what specific exclusions have been identified?

The scope defines what is within the boundaries of the project and what is outside those boundaries, particularly where there may be areas of doubt.

Initial scope: SEN Home to School Transport (WCC, LBHF), vulnerable adult transport to day centres (LBHF)

Medium term scope: SEN Home to School Transport, vulnerable adult transport to day centres and taxicard scheme (WCC, LBHF)

Ongoing exclusions for looked after children contact visits and home to school transport for looked after children with SEN.

4.5 Key Risks

Please use the table below to outline the key risks identified during the planning process. Key risks should be identified and graded according to likelihood of occurring (Probability – High(H) /Medium (M) or Low (L) and seriousness (Impact – High, Medium or Low). You should also define how risks will be minimised (Mitigating Actions).

| Risk No. | Risk Description | Probability (L/M/H) | Impact (L/M/H) | Mitigating Actions | Responsible Officer | |----------|----------------------------------------------------------------------------------|---------------------|----------------|-----------------------------------------------------------------------------------|---------------------| | 2 | Delay due to difficulty between authorities in agreeing governance and project management model | M | M | Early discussion and early agreement on model | Rachel Clark | | 3 | Differences between partners on agreed objectives, eligibility policies, contract documents, use of assets and commercial imperatives | M | M | Early and continuous discussion between partners, at all levels of both organisations, including the need to compromise where necessary to deliver the wider prize. There will be joint production of all key documents to ensure full buy-in from both partners | Rachel Clark | | 4 | One authority withdraws from the joint procurement | L | H | This would be a major blow. However, the pre-signed access agreement would allow other WLA authorities to join at a later date and thereby deliver collaborative benefits | Project Sponsors WCC &LBHF | | 5 | Failure to elicit market interest | L | H | LBHF have already placed a PIN and held a provider’s event, with Westminster, RBKC and | Project Team | | | | | | |---|---|---|---| | | | | | | WLA representatives present. Following the event, several market players have expressed interest in a joint contract (a framework that could incrementally expand over time to include others). Both partners are committed to further ongoing dialogue with the market on key issues prior to inviting tenders, including regular provider update bulletins, the last of which was posted 12 May 2010 | | | | | | | 6 | Lack of stakeholder buy-in; possibly accompanied by adverse media publicity and / or campaigning arising from service users’ and family concerns at the new contract | L | M | | | Early engagement with stakeholders, including service users, their families and carers, schools, day centres, representative community organisations, staff and trade unions – supported by a clear and on-going communications strategy | Project Manager | | | | | | | 7 | TUPE complications | L | M | | | Early gathering and checking of TUPE information. Early consideration and policy resolution of any risks and liabilities providers express concern at accepting the transfer of | WCC and LBHF HR | | | | | | | 8 | Poor vfm tenders (taking into account quality and cost) being returned at the end of the competition | M | H | | | This risk will be reduced by following the actions described in points 5 and 7 above | Project Team |

### 4.6 Project Key Milestones

Please indicate key milestones for the project in the table below:

| No. | Project Stage or Phase | Key Milestone | Target Completion/Delivery Date | Responsible Office | |-----|------------------------|-------------------------------------------------------------------------------|---------------------------------|----------------------------------------| | 1 | Initiation | Submission of agreed joint bid / PID to Capital Ambition | June 2010 | Liza Gugliotti / Rachel Clark | | 2 | Initiation | Joint project team and governance arrangements established | July 2010 | Rachel Clark WCC / John Francis LBHF | | 3 | Initiation | Agree final list of other local authorities joining the process | July 2010 | Rachel Clark WCC / John Francis LBHF | | 4 | Planning | Eligibility policies approved | July 2010 | Rachel Clark WCC / John Francis LBHF | | 5 | Planning | Consultation with service users completed | July 2010 | Rachel Clark WCC / John Francis LBHF | | 6 | Planning | Data gathering complete | August 2010 | Rachel Clark WCC / John Francis LBHF | | 6 | Planning | Agree Specification and pricing mechanisms between partners, including possible discount mechanisms should contract expand | August 2010 | Rachel Clark WCC / John Francis LBHF | | 7 | Planning | Agree access agreement - giving other authorities option of joining contract later | August 2010 | Rachel Clark WCC / John Francis LBHF | | 8 | Planning | Consultation with market on first draft specification and pricing proposals | August 2010 | tbc dependent on CA bid. | | 9 | Execution | Placing of OJEU and commencement of formal competitive tendering | August 2010 | tbc dependent on CA bid. | | 10 | Execution | Short list of potential suppliers agreed | August 2010 | tbc dependent on CA bid. | | 10 | Execution | Invitations to tender issued | October 2010 | tbc dependent on CA bid. | | 11 | Execution | Return and evaluation of tenders | December 2010 | tbc dependent on CA bid. | | 12 | Closure | LBHF and Westminster CC Cabinets agree contract award. | March 2011 | tbc dependent on CA bid. | | 13 | Closure | Contractor mobilises resources and handles TUPE transfer. Contract commences. | April 2011 | tba | Please attach a project GANTT chart that clearly shows activities and milestones throughout all phases of the project.

5. Project Controls

5.1 Project Governance

Please provide a diagram showing the proposed governance structure if approved. There should be the minimum of a Project Sponsor, Project Board and Project Manager.

Capital Ambition Efficiency Board

Project Board

2 x Cabinet Members, 2 x Directors of Children's Services, Strategic Director of Resources (Project Sponsor), Head of Procurement

Project Team

Project Manager (TBC) Data Analyst (TBC) Procurement Manager - Rachel Clark WCC Procurement Officer - John Francis LBHF Legal Support x2 (WCC and LBHF) HR x2 (WCC and LBHF) Finance x2 (WCC and LBHF)

Project Board Membership: Alastair Gilchrist, Strategic Director of Resources WCC – Project Sponsor Cllr. Nicola Aiken, Cabinet Member for Children’s WCC Michael O’Connor, Director of Children’s Services WCC David Loseby – Head of Procurement WCC Cllr. Helen Binmore, Cabinet Member for Children’s Services LBHF Andrew Christie, Director of Children’s Services LBHF Gill Sewell, Assistant Director of Children’s Services LBHF

### 5.2 Project Board Controls

Describe how the Project board will exercise its control over the project, referring to the project governance diagram as appropriate.

- Monthly headline report, including progress, issues and risks to Project Team (PT) and Project Board (PB)
- PB to meet as a minimum 2 monthly and then monthly once OJEU issued to agree to move on following successful completion of each key milestone
- Project manager to act as link between PT and PB

### 5.3 Day-to-Day Controls

Describe how the Project Manager will control the day-to-day running of the project.

- Tightly managed project plan
- Daily calls with Project Team
- Weekly project meetings
- Daily risk and issue management
- Completion of weekly project report

### 5.4 Monitoring Procedures

How will the project deliverables, costs and timescales be tracked?

- Project Manager to track costs, benefits and deliverable and include within weekly project report, issues to Project Board and Capital Ambition

### 5.5 Project Reporting

Describe what reports will be produced for monitoring and control purposes.

- Project manager to complete a weekly project report and a monthly Project Board. With a RAG rating for each element.
- Project Manager to complete monthly Capital ambition report.

### 5.6 Escalation Procedures

Describe the escalation procedures for dealing with deviations from plan, which exceed the authority of:

- a) the Project Manager to Board
- b) the Project Board to SEB and Cabinet (WCC and LBHF)
- c) SEB and Cabinet to Capital Ambition Efficiency Board

### 5.7 Risk and Issues Management

Noted – Project Manager will be responsible to developing and maintaining this

### 5.8 Measures of Success

Please describe the measure(s) that will be used to indicate that the project has been successfully completed.

- **Reduced costs**: WCC and LBHF are able to achieve and successfully track 10%+ cashable savings over the contract period.
- **Increased efficiency**: Reduction in vehicle numbers used for current volumes and reduction in staff hours required to monitor current arrangements.
- **Customer satisfaction**: survey results indicate no reduction in customer satisfaction.
- **Reduced environmental impact**: Reduction in mileage per person.
- **Increased collaborative working**: Robust contract for transport services used by WCC, LBHF and other authorities from 1 September 2011.
- **Increased flexibility**: WCC and LBHF able to source additional transport services via this framework contract as existing contracts end.
- **Improved capacity for joint procurement**: Further collaborative procurements for shared services between WCC and LBHF.

### 5.9 Communications Strategy

How you will be managing project communications throughout the lifecycle of the project?

Project manager will develop a Stakeholder communication plan. Depending on the internal Stakeholder there will be weekly / monthly reports on issues. Communication may also take place in line with the escalation procedure.

There will be also be consultation and communication throughout the project with external stakeholders - such as service users, parents and carers, special schools and adult day centres – as well affected employees in line with TUPE requirements.

### 5.10 Lesson Learned

Noted: Risk and Issues log will be expanded to capture lessons learned.

### 5.11 Partner Authorisation

Please indicate approval and acceptance of this proposal by the Project Board and Partner organisations participating in this project.

| No. | Organisation Represented | Name | Signature | Date | |-----|--------------------------------|-------------------------------------------|-----------|------| | 1 | Westminster City Council | Cllr Nicola Aiken (Cabinet Member) | | | | 2 | Westminster City Council | Alastair Gilchrist (Strategic Director of Resources) – Project Sponsor | | | | 3 | Westminster City Council | Michael O’Connor (Director of Children’s Services) | | | | 2 | LB Hammersmith & Fulham | Cllr Helen Binmore (Cabinet Member) | | | | 3 | LBHF | Andrew Christie (Director of Children’s Services) | | | | 5 | RB Kensington & Chelsea | Nicholas Holgate (Director of Finance) | | | | 6 | West London Alliance | Ian Nichol (Director) | | |

Thank you for completing this proposal.

We are happy to receive a copy by email to the Capital Ambition Programme Management Office – CA-PMO@londoncouncils.gov.uk

Please sign and send hard copy to (and for further information):

Capital Ambition Programme Management Office Capital Ambition London Councils 59½ Southwark Street London SE1 0AL

Signed………………………………………………………………………………Date………………………………

Print Name ………………………………………………Position…………………………………………

Before submission please ensure this proposal has the support of the Chief Executives of all joint-proposers, and where appropriate Elected Members. Summary results

Project: Collaborative Procurement: Passenger Transport Services and Vehicles

Financial impact (£000's)

| Item | Description | Value | |------|-------------|-------| | Setup costs (Costs of designing and implementing the project) | (248) | | Ongoing costs (Costs of delivering and managing benefits) | (5) | | Cashable benefits | 1,330 | | Payback over period of project | 1,077 | | Potential variation in payback | 22% | | NPV | 950 | | Non-cashable impact on staff | (147) | | Non-cashable impact on office space | - |

Strategic impact

| Item | Description | Value | |------|-------------|-------| | Strategic performance indicators | | |

Project risks

You identified 15 project risks. The six most serious are:

| Risk | Likelihood | Impact | |------|------------|--------| | Not having the right commercial model | 3/5 | 5/5 | | Cost overrun on services | 3/5 | 5/5 | | Delay to project milestones | 3/5 | 4/5 | | Not obtaining key information from other LA's | 2/5 | 5/5 | | Loss of key personnel | 2/5 | 5/5 | | Political or policy changes | 2/5 | 5/5 |

Explanatory notes

Financial impacts - Confidence Level. The 'confidence in inputs' bar shows the average confidence that the tool's user has in the financial inputs. A high degree of confidence indicates that the actual costs and benefits are unlikely to vary much from the forecast in this tool. Low confidence indicates that a larger variation is likely - possibly because unreliable data sources have been used.

Financial impacts - Non-Cashable Impact. 'Non-cashable' impacts on staff or accommodation represent the value of additional or reduced capacity that does not affect the organisation's budget. A positive number in the staff non-cashable impact, for example, indicates that the project will free up staff time but staff will not be redeployed, and will therefore be able to provide a better service.

Performance indicators. The bar on the right shows which performance indicators are relevant to this project. If more than ten are relevant, the ten upon which the project has the greatest positive impact are listed.

Community (internal) impact and Organisational (internal) impact. The summaries in the charts shown above are based on an assessment of the relevant performance indicators for each category shown in the charts.

Project risks. This section summarises the most serious risks that the project faces. Project/Subject: Promoting the Consultancy and Professional Services Procurement project to London authorities

Report by: Salli Reynolds, Project Manager Email: salli.reynolds@londoncouncils.gov.uk

Agenda item: 7

Strategic Theme: Delivering Together

Purpose: To receive the closure report for this project and consider the additional recommendations for the future direction of this work.

Financial implications 2010/11:

| Financial Year | Existing Project Approval | Committed/Spend In Year Total | Balance | New Funding Request | Total Existing Approval + New Funding Request | |----------------|---------------------------|-------------------------------|---------|---------------------|---------------------------------------------| | 2009/10 | £35,000 | £19,248 | £15,752 | 0 | £35,000 | | Total | | | | | £35,000 |

There is an underspend of £15,752 on this project which is available for/has already been carried forward to contribute to savings on the 2010/11 budget.

Executive summary: This report describes the third phase of work to improve the procurement of, and reduce spend on, consultants. Previous phases had developed and piloted the use of 5 main tools to support boroughs in getting value for money from consultancy use, and this phase sought to publicise these tools and encourage further take up. The report shows that this has been achieved.

The recommendations from the closure report are simply to close this phase of the project and ensure the website is kept up to date annually. However, it is clear that this area of expenditure, along with agency staff, interims, and indeed permanent employees, is still of major significance in the current climate.

Given the level of spend on consultants across London of some £300m p.a., it is proposed to consult on and develop a new proposal to address the costs and savings to be made from a more holistic approach to resourcing, coupled with better supplier and contract management, and the development of better data on both workforce requirements and spend in the broad temporary and professional services categories. This will take account of the achievements of all stages of this project, including those led by Hounslow, the City of London and Islington, and the new Consultancy Value Programme work being led by OGC, which the other RIEPS are now actively promoting. **Recommendation:** That the Board: i) accepts the closure report from London Borough of Lambeth; ii) considers the recommendations in paragraph 3.2 of the report; and iii) notes that a further programme of work will be developed and submitted to a future meeting of the Board.

**Appendices:** Appendix A: Promoting the Consultancy and Professional Services Procurement project to London authorities, Closure report June 2010

**Background papers:** Capital Ambition Professional Services Procurement Project – follow-up stakeholder survey analysis July 2009 Capital Ambition Professional Services Procurement Project – follow-up stakeholder survey analysis May 2010 Consultancy Communications Plan Consultancy Workshops Attendance list

**Risk:** There is some evidence from the closure report that boroughs find the use of consultants particularly hard to control, given the often devolved responsibility for their procurement. It will therefore be important going forward to ensure that a focus on delivering real savings (on an estimated spend of approximately £300 million p.a. in this specific area) is maintained and promoted. Promoting the Consultancy and Professional Services Procurement Project to London Authorities

11 June 2010

Report by Esther Thomas

1. Background

The Consultancy and Professional Services Procurement Project was developed with London Centre of Excellence (LCE) funding to help authorities reduce spend and improve results from the purchase and use of consultants.

Stage one of the project was carried out in 2005/06 and was led by City of London and LB Hounslow. The second stage commenced in 2007 and was led by LB Islington. This report relates to the third stage of the project led by LB Lambeth. The focus of the third stage was to promote to London authorities the existing five products developed in the first two stages.

1.1 Stage one – led by City of London and LB Hounslow

City of London and LB Hounslow led the first stage of the Consultancy and Professional Services Procurement Project carried out in 2005/06. The project sought to help London authorities reduce spend and improved results from the procurement and management of consultants. Three products were developed as follows:

- Consultancy Commissioning Toolkit
- Consultancy Knowledge Centre
- Buying Consultancy Services Workshop

1.2 Stage two – led by LB Islington

In 2007, LB Islington received LCE funding to lead a second separate stage of the project. Stage two aimed to:

- Pilot and review the Commissioning Toolkit;
- Review and populate the Consultancy Knowledge Centre;
- Pilot and review the Buying Consultancy Services Workshop;
- Pilot an Internal Brokerage within LB Islington and other partner authorities;
- Promote the products from the first phase of the project to London authorities. The project manager left in 2007 and was not replaced. No activity took place on the project until the third stage commenced in June 09 led by LB Lambeth.

2. Promoting the Consultancy and Professional Services Procurement Project to London Authorities.

2.1 Project aims

With funding of £35k from Capital Ambition, LB Lambeth commenced work in June 2009 to promote the 5 consultancy products to London authorities.

The products are:

- **The Consultancy Commissioning Toolkit** – practical guidance and resources to review the approach, the procurement process and the management and evaluation of commissioning consultants.

- **A Guide to Buying Consultancy** - supplements the Consultancy Commissioning Toolkit and provides pragmatic guidance that helps to focus on and identify the results that need to be delivered.

- **The Buying Consultancy Services Workshop** – training to develop the specific skills required to commission and manage successful consultancy assignments and achieve better results.

- **The Consultancy Brokerage Model** – provides a central point within an authority for commissioning consultants and helps to address fragmented practices.

- **The Consultancy Knowledge Centre** - provides local authorities with the capability to share information and data on completed consultancy assignments.

The project aimed to:

- increase awareness among London authorities of the products and services resulting from the first two stages of the project and the benefits to be gained;

- promote and embed usage of the products and services within London authorities.

- explore opportunities to share best practice and establish linkages to the work of other organisations where appropriate.

2.2 The project board

The project board partners from stage two consisted of the London boroughs of Islington, Merton, Redbridge, Ealing and Lambeth. The intension had been to reform the project board to enable the current stage to benefit from existing knowledge and experience.

However, attempts to reestablish the project board were unsuccessful, as the contacts within the partner boroughs had either moved on or, in the case of Ealing, had not responded to a number of contacts made by the project.

As part of second stage of the project, the partner boroughs had agreed to pilot and review the Consultancy Knowledge Centre. The findings of the review were to provide recommendations for the development of the Centre and help to embed usage among London authorities. On contacting the partners, it became apparent that, with the exception of LB Islington, none had trialled the Centre. As a result, expected review information was not available to support promotion of the Consultancy Knowledge Centre during the current stage.

2.3 Initial stakeholder survey to establish levels of awareness, understanding and usage of the products.

An initial stakeholder survey was sent to all London boroughs and the GLA Group. The aim of the survey was to measure existing levels of awareness, understanding and usage of each of the 5 products by London authorities. The survey was targeted at Heads of Procurement and Directors of Finance.

The fragmented nature of consultancy procurement would make it difficult for procurement teams to judge whether and to what extent their authority used the products. However, the survey would provide an insight into levels of awareness, understanding and usage within London authorities.

2.4 Overview of Survey Findings

Twenty-one authorities responded to the survey, all of which were London boroughs with the great majority of responses coming from procurement teams. A summary of responses is attached (Appendix 1).

As expected, the survey results indicated that general levels of awareness and understanding of the products among boroughs was low, resulting in low levels of usage. Some of the key points are below - it should be noted that not all respondents answered every question:

- Twenty-one authorities responded to the survey, 13 of which confirmed that they were aware of the project prior to receiving the survey. However, 8 had not heard of the project prior to receiving the survey.

- Only 8 authorities said that they had used one or more of the products.

- The Consultancy Commissioning Toolkit and A Guide to Buying Consultancy had the highest usage. The Brokerage Model, the Consultancy Knowledge Centre and the Buying Consultancy Services Workshop appeared to be less popular. This was closely related to varying levels of understanding of the products.

- No borough disagreed that all of the products had potential to deliver better value for money from the purchase and use of professional services. However, in the case of the Consultancy Knowledge Centre, Brokerage Model and Workshop, around half said that they neither agreed nor disagreed.

- On the whole, boroughs thought that the Commissioning Toolkit and Guide to Buying Consultancy had the most potential to deliver better value for money. Both products involve the least amount of organisational change.

- Five out of 11 boroughs said that lack of awareness and understanding among staff made it difficult for their authority to use the products. Procurement processes becoming too onerous and the lack of control over who procures consultants were also given as reasons.

- In relation to promoting the benefits to London authorities, the most favoured options among boroughs were a London-wide event, support to promote the products internally and linking products to existing consultancy frameworks.

- Sixty five percent of respondents said that they did not know enough about the products overall to be able to recommend them.

**Consultancy Knowledge Centre**

- Of the 8 out of 21 boroughs that have used one or more of the products, only 1 authority had used the Consultancy Knowledge Centre.

- Understanding of how to use the Centre was split. Five out of 10 boroughs did not understand how to use it while 4 out of 10 said that they did.

- Seven of 12 authorities agreed that the Centre had the potential to deliver value for money from the purchase and use of professional services. None disagreed but 5 neither agreed nor disagreed.

**Consultancy Brokerage Model**

- The survey showed low levels of understanding of the Brokerage Model. It also showed that none of the surveyed boroughs were using it.

- Only 1 out of 10 boroughs agreed that they knew how to use the brokerage model. Six disagreed and the remaining 3 neither agreed nor disagreed.

- However, 6 out of 11 agreed that it had the potential to deliver better value for money from the purchase and use of professional services while the other 5 remained undecided.

**A Guide to Buying Consultancy**

- This was one of the more popular products; however, only 6 authorities were using it.

- Six of 13 said that they knew how to use it. • Eight out of 11 authorities agreed that it had the potential to deliver better value for money, while 3 were undecided.

• Those using the Guide found it of value and were willing to recommend it to others.

Consultancy Commissioning Toolkit

• The Commissioning Toolkit was one of the most used products. Five out of 8 of those using one or more of the products were using the Commissioning Toolkit. Understanding was relatively high compared to other products.

• Six out of 12 boroughs said that they understood how to use the toolkit.

• Nine out of 12 boroughs thought that it had the potential to provide value for money from the purchase and use of professional services.

Buying Consultancy Services Workshop

• Four out of 10 boroughs understood how to use the Buying Consultancy Services Workshop. Of the 8 boroughs using the products, only 1 authority said it was using the workshop.

• Information from London Met showed that at least 8 authorities had used the Buying Consultancy Workshop (including the GLA and the Olympic Delivery Authority (ODA)). These authorities were:

• LB Islington, LB Redbridge, LB Lambeth, LB Merton, City of London, LB Hounslow, Greater London Authority and the Olympic Delivery Authority.

2.5 Stakeholder communications plan

The survey results suggested scope to increase usage through raised awareness and understanding of the products. A stakeholder communications plan was developed (see Appendix 2) with the following communications objectives:

1. increase awareness and understanding of the products of the Professional Services Procurement Project (and the benefits) from 13 to 33 London authorities by 31 October 2009.

2. increase usage of the products from 8 to 20 London authorities by 31 October 2009

• Although any follow up survey might not score 100% in relation to authorities’ levels of awareness – it was important to aim to engage every London authority.

• The project timescales were affected by the decision to host a London-wide Project Showcase in November and the scheduling of the complementary workshops.

2.6 Communications activity carried out The following activities were carried out as part of the stakeholder communications plan developed to tackle the issues highlighted by the survey:

**A London-wide event held on 4 November 2009**

- This took the form of a project showcase and included a number of other Capital Ambition projects to maximise the benefits to attendees. The aim was to raise awareness and understanding of the projects and stimulate borough participation.

**Rebranded Consultancy Commissioning Toolkit and Consultancy Knowledge Centre**

- The Consultancy Commissioning Toolkit and Consultancy Knowledge Centre were both re-branded from LCE to Capital Ambition to bring them up to date. The Electronic Knowledge Exchange or ‘EKE’, as it was then called, was renamed the Consultancy Knowledge Centre (CKC) to distinguish it from the Agency Staff EKE and remove confusion. The Consultancy Knowledge Centre permissions were revised making it easier for non-London boroughs to access the centre. Also, registration requests were now being monitored and processed.

**Buying Consultancy Services Workshop**

- Five complementary Buying Consultancy Services Workshops were held between November 2009 and February 2010 to stimulate interest among authorities and encourage adoption of the course.

**Text for intranet and internal communications**

- Text explaining the five products was produced to help procurement teams disseminate information on the Consultancy and Professional Services Procurement project within their authorities. Survey respondents said that they would find this useful.

**Management Presentation**

- A management presentation explaining the 5 products and outlining the benefits of each was sent to procurement teams to help them disseminate information internally. Capital Ambition could also use the presentation to engage stakeholders e.g., SLT, CELC. Consultancy Value Programme

- The project liaised with the OGC and East Midlands RIEP in relation to the Consultancy Value Programme which was being adapted for local government. Information was fed back to Capital Ambition and London authorities were sign-posted to this work. Capital Ambition is liaising directly with OGC with regard to whether / how to take forward this work in London.

Consultancy pages on the London Councils website

- The project web pages were rewritten and updated with information relating to the five products. The rebranded and revised Consultancy Commissioning Toolkit and accompanying project management documents, details of forthcoming workshops, the management presentation, the internal communications text and access to the Consultancy Knowledge Centre were also added to the site. Visitors were also sign-posted to the Consultancy Value Programme.

- Prior to this, information on the project and access to the Consultancy Knowledge Centre had been split between the old LCE site and the London Councils site. Visitors were also directed to the Agency Staff EKE in error.

2.7 Stakeholders

Stakeholder engaged included the following:

| Stakeholder | Description | |--------------------------------------------------|-----------------------------------------------------------------------------| | Chief Executive’s London Committee (CELC) | A briefing paper for CELC to note and a briefing note for the CELC extranet site. | | Heads of Procurement | Including regular email updates and information via the CA newsletter (forwarded to HoP as many did not know it existed). | | Society of London Treasurers (SLT) | Briefings for SLT to note. | | Generally | Project updates via the Capital Ambition website and newsletter, London-wide event etc. | | London Contracts and Supplier Group | Articles for the LCSG newsletter. | | Office of Government Commerce | Sharing information on the London project and the Consultancy Value Programme led by OGC and the East Midlands RIEP. | 2.8 Budget and Project spend

| Description | Amount | |------------------------------------------------------------------|---------| | Capital Ambition Funding | 35000 | | Consultancy fees (24 days at £475) | 11400 | | Consultancy Commissioning Toolkit rebranding | 980 | | Consultancy Knowledge Centre rebranding | 825 | | Support at the London-wide Showcase | 1052 | | Contribution to London-wide Project Showcase | 871 | | Buying Consultancy workshops x 5 | 4000 | | Adjusting access to Consultancy Knowledge Centre | 120 | | **Total spent** | **19248**| | **Balance** | **15752**|

3. Project Outcomes

Findings from the May 2010 follow up stakeholder survey

- A short follow-up survey of procurement teams was carried out in May 2010 to monitor project progress (see Appendix 3). The survey results showed good increases in levels of awareness and understanding in relation to the 5 consultancy products.

- Twenty authorities responded to the survey. With the exception of one respondent from Transport for London, all 20 respondents confirmed that they were aware of the project. The initial survey carried out in June 09 showed that 8 out of 21 authorities had not even heard of the project.

- In both surveys, respondents were asked:

  Q1: 'To what extent do you agree that you understand how to use the products from the Consultancy and Professional Services Procurement Project?' Table 1: responses to Q1 from the June 09 and May ’10 surveys.

| Products | June 2009 | May 2010 | |---------------------------------|-----------|----------| | | Total disagree % | Total neither / nor % | Total agree % | Total disagree % | Total neither / nor % | Total agree % | | Buying Consultancy Services Workshop | 40% | 20% | 40% | 0% | 0% | 100% | | Consultancy Knowledge Centre | 50% | 10% | 40% | 0% | 0% | 100% | | Consultancy Brokerage Model | 60% | 30% | 10% | 0% | 0% | 0% | | A Guide to Buying Consultancy | 23% | 31% | 46% | 0% | 13% | 88% | | Consultancy Commissioning Toolkit | 25% | 25% | 50% | 0% | 0% | 100% |

- Although fewer people answered this question in the second survey than the first, the results indicate increases in awareness and understanding in relation to the 5 consultancy products. In May 2010, none of the respondents who answered this question said that they did not understand the products. This is a positive change since June 09 and provides a solid basis for further work to increase usage of the products.

- Respondents were also asked:

  Q2: ‘To what extent do you agree that the following products have the potential to deliver better value for money from the purchase and use of professional services?’

Table 2: responses to the Q2 from the June 09 and May ’10 surveys

| Products | June 2009 | May 2010 | |---------------------------------|-----------|----------| | | Total disagree % | Total neither / nor % | Total agree % | Total Disagree % | Total Neither / nor % | Total Agree % | | Buying Consultancy Services Workshop | 0% | 44% | 56% | 0% | 35% | 60% | | Consultancy Knowledge Centre | 0% | 42% | 51% | 10% | 40% | 40% | | Consultancy Brokerage Model | 0% | 45% | 55% | 5% | 60% | 30% | | A Guide to Buying Consultancy | 0% | 27% | 73% | 0% | 25% | 75% | | Consultancy Commissioning Toolkit | 0% | 25% | 75% | 0% | 25% | 70% |

- Many respondents agreed that the products have the potential to deliver better value for money, although opinion is now more mixed particularly with regard to the Brokerage Model and Consultancy Knowledge Centre. Buying Consultancy Services Workshop feedback

- Thirty-nine people from 21 London authorities attended the 5 complementary courses that took place between November 09 and February 10 (see Appendix 4). The feedback from attendees was very positive. As a result, LB Hammersmith and Fulham ran an in-house workshop and LB Merton ran three. The contract to run the course is currently out to tender.

Consultancy Knowledge Centre

- There are now 16 authorities registered as Consultancy Knowledge Centre users. However, LB Islington is the only authority that has entered contract information.

Information and Resources

- The survey showed that some authorities are making use of the information provided on the Capital Ambition website as well as resources such as the management presentation and intranet/internal communications text.

3.1 Conclusions

- Usage of the products is still fairly low. However, as a result of communications activity to date, there have been promising increases in levels of awareness and understanding.

- This will form a solid basis for further communications work to increases product usage by London authorities.

3.2 Recommendations for further work

It is recommended that:

1. Stage 3 of the project is closed.

2. Capital Ambition reviews the project web pages on an annual basis ensuring that they are kept up to date

There is a balance of £15,752 remaining in the budget. Project/Subject: London Energy Project

Report by: Michael Wood – Programme Director

Agenda item: 8

Strategic Theme: Energy Procurement, Processes Efficiency, Energy Management and Carbon Reduction

Purpose: To receive the Phase 3 closure report and provide the Board with:

- An overview of current significant achievements and efficiency gains/savings
- An overview of key challenges for the future, including re-baselining of savings to 2009/10
- The need for continued leadership and support to embed change in boroughs and to identify further potential savings and benefits.
- A high level overview of proposed programme activities, deliverables and their benefits

Financial implications:

| Financial Year | Existing Project Allocation £ | Committed to date £ | Spend to date £ | Balance £ | Additional Funding Request | Total Existing Funding + Additional Funding Request | |----------------|-------------------------------|---------------------|-----------------|-----------|---------------------------|--------------------------------------------------| | **Phase 1** | | | | | | | | 2004/2005 | 33,400 | 33,400 | 33,400 | 0 | 0 | 33,400 | | **Phase 2** | | | | | | | | 2005/2006 | 30,000 | 30,000 | 30,000 | 0 | 0 | 30,000 | | 2006/2007 | 50,000 | 50,000 | 50,000 | 0 | 0 | 50,000 | | 2007/2008 | 70,444 | 70,444 | 70,444 | 0 | 0 | 70,444 | | **Phase 3** | | | | | | | | 2008/2009 | 280,000 | 7,641 | 7,641 | 272,359 | 0 | 280,000 | | **Phase 4** | | | | | | | | 2009/2010 | 0 (c/f of £272,359) | 101,446 | 101,446 | 170,943 | £149,000 | 149,000 | | 2010/2011 | 0 | 0 | 0 | 0 | | | | 2011/2012 | | | | | | | | **Total** | | | | | | 149,000 | 612,844 | Executive summary:

The London Energy Project (LEP) has delivered both cashable and non-cashable savings. It has successfully demonstrated its value over the past four years and provides proportionate and directed leadership, including practical support to boroughs to respond to common challenges and developments in energy supply and process. It has become a key central resource and focal point and has established relationships with many parties and stakeholders involved in public sector energy supply and use.

The principal project activities delivered in 2009/10, and high-level benefits summary are detailed in the attached closure report, which also includes an overview of recommended future activities for 2010/12, (Appendices 1 & 2).

Best practice procurement LEP’s initial priority was to transform energy procurement from traditional tendering methods to flexible purchasing contracts which help manage the risks involved in buying on volatile commodity markets. This activity is almost complete, but the challenge now is to drive continuous improvement in buying organisations, ensure transparency in terms of performance and value for money and introduce steps to better manage the utilities supply chain.

Process efficiency and improvement LEP has worked with GS1UK and the utilities industry to develop a new global standard for a multi-site consolidated invoice. Design is nearing completion and now requires implementation support to manage adoption by boroughs. It is forecast that boroughs’ operational costs will be reduced through the use of a common standard; payment processes will be improved and management information will become more accurate and accessible.

The project previously developed a ‘Self-Assessment Action Plan’ which enabled Boroughs to measure their current energy capability and performance, and to identify improvement opportunities. A refreshed version of the ‘Action Plan’ will be developed that addresses a broader range of strategic and operational issues, which extends to evidence gathering and is auditable to support further improvements across a range of measures. Improvements will focus on customer practices and identified ways of reducing the cost to serve for suppliers, which can be passed through to boroughs to maximise benefit.

Sustainability and Carbon Another key challenge for London local authorities is to comply with and effectively manage the risks and opportunities presented by the Carbon Reduction Commitment (CRC). LEP is already recognised nationally for its knowledge and expertise in this area and is very well positioned to develop further best practice and tools to aid compliance and mitigate risks. LEP also has been asked by boroughs to investigate solutions for carbon trading, financial management and carbon reduction. It is anticipated the purchase of carbon allowances across London boroughs will be somewhere in the region of £25million, and the potential fines and reputational damage for non-compliance or inaccurate reporting are severe.

LEP has planned CRC energy and finance modules it anticipates launching by Autumn 2010. As this has a national benefit and to reduce Capital Ambition’s costs, LEP planned for this to be funded nationally by the RIEPs (£6k each). Due to RIEP uncertainty these tools may not be progressed if alternative funds cannot be identified and accessed. Reducing energy consumption and generating optimum return on investment for capital projects, in terms of energy efficiency is not coordinated across London. LEP has plans for a Pan-London review of energy efficiency measures already implemented, analysis of their success rate, barriers to change and an evaluation of current public sector building performance. To add value to participant boroughs a CRC health check, will be carried out at the same time. A PID for this project has been submitted separately.

**Collaboration, knowledge transfer and best practice** LEP supports strategic change and is user led, responding to practical priorities identified by London Boroughs’ finance and energy management community. LEP has realised benefits for participants through collaborative activities ranging from informal knowledge sharing to producing best practice guidance and case studies to commissioning services. There is an expressed need for this activity to continue, and also for proportional and directed leadership, which challenges established ways of working and assists stakeholders with managing change within their own organisations. LEP is well placed to continue its effective communication through established routes, such as newsletters, workshop events and best practice toolkits.

**Influencing policy development** Finally, LEP has the ability to connect with other organisations at a strategic level through ‘Coordinated representation’. This has increased local government’s influence in policy consultations and improved customer service levels with service providers. It should continue to ensure London local government interests are heard and responded to.

**Measurable savings and efficiency** LEP is looking to target annual savings of approx £35m across London boroughs (against CSR 07 targets) through the effective management of buying organisations, identifying further opportunities for procurement cost avoidance, improvement in the efficiency of borough administration and payment processes, expanding the scope and quality of bureau style services and reducing the risks and costs associated with carbon reduction.

**Project Outcome (s):**

- Measurable savings and efficiencies delivered through borough adoption of recommended procurement, sustainability and transaction improvements, circa £35m p.a. (based against CSR 07 targets)
- Cashable and non-cashable savings realised through process efficiencies resulting from the adoption of consolidated invoice processing and payment practices
- Improved services and increased transparency of the performance of buying and service organisations and service providers operating within London
- Improved understanding of strategic supply issues; potential benefits identified through a centralised expert client function and boroughs enabled to benefit from a managed market
- Increased capability and culture change within boroughs through knowledge transfer and adopting best practice
- Managed risks and costs associated with compliance and trading within the Carbon Reduction Commitment; opportunities for reputation and financial benefits identified
- Strategic approach to carbon reduction pan-London, including routes to market for technology and implementation solutions Continued high level representation on value for money and other policy issues for London boroughs with central government departments, suppliers and service providers

Key Risks:

- Process, practice and culture change in London Boroughs is still being embedded. Change may stall or fail without LEP’s continuing support and leadership.

- The future of the LEP beyond Capital Ambition funding 2011 is unclear, yet current work-streams and London public sector demands will extend programme activities until at least 2012/13. In the absence of LEP’s centralised resource and expertise it is unlikely that efficiency and improvement activity will be sustained at the current level and performance standards maintained.

- Recommended future funding options (Capital Ambition Review of London Energy Project, December 2009, PA Consulting Group) need to be addressed, to ensure continued cooperation of government departments, buying organisations and skilled capacity within the project itself.

- LEP’s role is varied and contains many interdependencies on activities across the work programme, e.g. certain CRC compliance issues also lead to best practice procurement. Balancing priorities and having flexibility and adaptability to changing circumstances through governance and consultation is vital.

Recommendations:

That the Board:

(i) recognises the achievements and realised benefits in the Phase 3 closure report; (ii) endorses the draft programme of work activities/benefits attached at Appendix 2 (subject to re-baselining against 09/10); and (iii) if the Board recognises the need for LEP to continue on a more permanent basis, to consider and resolve future funding and hosting options with key stakeholders appropriate as soon as possible.

Appendices: Appendix A: Phase 3 closure report 2009/10 Appendix B: CPB Flex Contract Savings for London Appendix C: DRAFT Overview of future activities and benefits 2010-2012

Background papers: None London Energy Project

Phase III Closure Report

02 July 2010

Report of Michael Wood, Programme Director

## CONTENTS

1. Executive overview 3
2. Introduction 7
3. Summary 8
4. Lessons learnt 11
5. Benefits realisation 15
6. Ongoing arrangements 19
7. Sign-off 20
8. Acknowledgements 20 Appendix 1 21 Appendix 2 23 Appendix 3 24 Appendix 4 25 PHASE III – EXECUTIVE OVERVIEW

1.1 Energy procurement and price risk management The energy market is volatile; prices can fluctuate up to 5% on a given day and up to 100% in a year. London local authorities alone spend approximately £300 million per year on energy - a huge risk and equivalent opportunity for efficiency savings.

The energy suppliers and their supply chain are fairly unresponsive and slow to change, customer service and utility invoicing tends to be patchy as does quality of management information provided to customers. This is due to a range of issues ranging from their own regulatory obligations and reliance on grid operator performance through to competition being limited to ‘big six’ companies. Central Purchasing Bodies (CPBs) have improved their energy procurement strategies, although transparency of performance, demonstration of value for money and management of utility suppliers remain key issues.

In 2005, none of the CPBs used by many London authorities offered aggregated, flexible, risk managed (flex) contracts. Flex contracts smooth the volatility of market forces, provide better value for money and enable better cost control. Purchasing bodies traditionally provided contracts to the public sector whereby the price for all supply requirements for a year or more, often with multiple suppliers, was fixed on a single day. Fixed term, fixed price contracts give only a 1 in 220 chance of buying on the cheapest day and constantly changing suppliers generates an administrative burden and does not enable closer working with suppliers. The business case for moving to a risk managed approach in a highly volatile market was obvious. However, the London public sector was not geared to aggregate its supply requirements and nor were its service providers and suppliers.

1.2 Change management London was dealing with the market from a weak position. A transition had to be made from historical fixed priced strategies and the cost inefficiencies of individual purchasing to a position of working together and increasing collective buying power to a large enough volume to share a procurement solution.

The London Energy Project (LEP) needed to work with provider organisations and their suppliers to make a parallel transition, operate within wholesale markets and change the basis of their public sector contracts.

In Phase II the project produced a specification of requirements for London authorities. The project evaluated three Central Purchasing Bodies (CPB) against the specification of requirements, recommending two CPBs for use in London to provide aggregated, flexible, risk managed energy contracts and the third CPB agreeing to a improvement programme that should enable them to achieve the LEP requirements in due course. 1.3 LEP’s approach

LEP has established a successful methodology of accelerating large-scale change of multiple participants, providing a centre of expertise, building trust and confidence and meeting the needs of differing and varied stakeholders (see Appendix 4). This has led to virtually all London boroughs and GLA functional bodies implementing recommended improvements to energy procurement; adoption and use of the CRC Toolkit and delegating authority to LEP to represent their interests. The elements of LEP’s approach could be replicated in other commodity areas and involve:

- identifying necessary improvements and developing a supporting delivery strategy
- articulating the business case and measuring benefits
- working across organisations - with energy management, finance and procurement communities
- providing improvement plans, implementation tools, business cases and individual borough support
- communicating clear, consistent and coherent messages to energy and finance managers
- delivering relevant events, which cross-cut borough work streams and provided delegates with real life experience to accelerate in-borough adoption
- meeting the needs of boroughs, supporting their day job, lobbying relevant government departments, playing a lead role on the national agenda and challenging suppliers where appropriate
- working with suppliers and service providers to meet customer needs and expectations
- taking a centralised and pro-active enabling role for boroughs, not just a toolkit or web tool, but a low-cost delivery agent for big change, managed by local government for local government

1.4 Other pressures

Alongside routine energy procurement and energy management, all London boroughs must reduce energy consumption, meet challenging carbon reduction targets and comply with the CRC Energy Efficiency Scheme (CRC), an obligatory emissions trading scheme covering both public and private sectors.

The CRC presented a new pressure for London that had not been part of the project’s plan at the commencement of Phase III. However, at no additional cost, LEP added this requirement to its scope in order to help boroughs meet the demands of the CRC and reduce the costs, risks and administrative burden to boroughs. Subsequently, the project’s work on the CRC has also reached out to the public sector across England and Wales.

1.5 Key challenges

The challenge in 2010 and beyond

Organisations buying and managing energy will need to:

- Reduce energy use and carbon emissions; in an increasingly pressurised budget environment Minimise energy costs, forecast energy budgets and manage risks in a volatile energy market

Deliver savings against new baselines established for 2009/10, which will be a real challenge given this was a year when energy prices were very low and supplier margins already substantially reduced through aggregation

Reduce energy payment and invoice administration costs and improve the accessibility and quality of financial and energy demand management information

Comply with and manage the risks and costs associated with the Carbon Reduction Commitment and carbon trading

Ensure capital investment opportunities to reduce energy consumption also maximise savings opportunities

LEP will need to

- Ensure buying organisations and their suppliers improve the quality and value of service delivered
- Ensure that compliance criteria and savings methodologies for buying organisations are robust, transparent, accurate and appropriately provided to Capital Ambition and London customers
- Identify new savings opportunities, such as power purchase agreements, renewable heat incentives and feed-in tariffs
- Continue to successfully lobby Department of Energy and Climate Change (DECC) and other government departments, in order to reduce local authority costs and administrative burden
- Continue to support boroughs on their preparations for the CRC scheme, providing knowledge and tools which enable boroughs to register and manage the costs and risks within the scheme. This work is ongoing, as the demands of the scheme and the vagaries of compliance become clearer, yet more complex
- Develop methods for boroughs to implement processes that reduce back office costs for energy invoice payments and electronic bill validation to maximise cost recovery
- Establish effective demand reduction approaches that can be applied at a pan-London level maximising savings and capital investment opportunities

Together, LEP, London boroughs and GLA functional bodies will need to address these challenges to deliver value for money and make improvements in the areas that will support corporate priorities and in-house efficiency and savings.

1.6 LEP continuation

How LEP is resourced and continues to be funded after its current Capital Ambition grant expires in March 2011 will have a significant impact on

- Maintaining a collaborative and aggregated pan-London site portfolio
- Accelerating change and sustaining common approaches to improvements to process efficiency and carbon reduction
- Identifying opportunities, managing strategic change, delivering savings and achieving efficiencies • Providing effective peer challenge to current practice, supplier practice and recommending best practice

1.7 Benefits delivered

• **Savings from the use of aggregated, flexible, risk managed contracts** This figure is based on the volumes of electricity and gas that London boroughs consumed through LASER and Buying Solutions compliant contracts, within full or part year 2009/10 (dependent on the date they joined the compliant arrangements). The figures do not include benefits generated by LB Greenwich and Southwark, as these have not delegated authority to LEP to receive and/or analyse their data. (The figures are based against 2007 CSR targets.)

o *Savings figures from LASER and OGC to follow.*

• 28 London boroughs and all GLA functional bodies have changed or are due to change this year to compliant aggregated, flexible, risk managed energy contracts (see Appendix 1).

• Delegated authority letters have been received from 31 authorities in London (see Appendix 1), which will allow the project to specify London’s energy requirements more effectively and manage supplier relationships.

• 4 events with excellent feedback and an average attendance of 73 delegates were hosted across the project’s work streams. Delegates have expressed the relevance to their work and how they have aided practical implementation (see Appendix 3).

• Over 400 copies of the CRC Guide and Toolkit have been distributed across England and Wales and all London authorities are using the toolkit and user guidance. 2. INTRODUCTION

This closure report outlines the achievements of Phase III of the London Energy Project(^1) (LEP), including lessons learnt and realisation of benefits. It should be noted that the project is continuing and that the challenges and benefits moving forward are detailed in Appendix 2.

2.1 Background

The UK public sector spends more than £3.8bn per year (2008/09) on energy and it is vital that authorities have the right strategies to manage this. Following a lack of clear strategic options in an increasingly volatile energy market, authorities recognised the need to improve energy procurement practices in London. The LEP is focussed on identifying and implementing best practice in energy (gas, electricity and oil) procurement, its supporting processes and Carbon Reduction Commitment in the London public sector.

The project brings together a diverse range of organisations to significantly improve the way energy is managed and procured.

The project has been delivered as follows:

**Phase I - Review**

The first phase of the project involved a review which evaluated the procurement processes of 21 London Boroughs, the London Fire and Emergency Planning Authority and 7 Thames Valley Boroughs from the South East Region. This report was published in March 2006 and found that there was a small group of participants consistently achieving good prices, compared to a larger group who were not achieving good prices. Furthermore, even the best performing authorities fell short of best practice. This indicated that there were significant areas for improvement.

**Phase II – Action planning and implementation of best practice**

Following the review, the Local Government Energy Procurement Action Plan was established to implement the recommendations from Phase I.

**Phase III – Benefits realisation**

Growing from the success of Phases I and II the project moved into focussing on 3 work streams: best practice energy procurement, efficiency and improvement and the Carbon Reduction Commitment (CRC).

______________________________________________________________________

(^1) The London Energy Project was formerly known as the London Centre of Excellence (LCE) Energy Project. This change followed the integration of the LCE into Capital Ambition, which the London Energy Project continues to be funded and supported by. 3. SUMMARY

3.1 Major activities completed in Phase III

- Development and publication of a **Guide and Toolkit** in collaboration with energy consultants Pulse 24 to help local government organisations in England plan for the Carbon Reduction Commitment. All London boroughs have downloaded a copy of the Guide and it has also been distributed to over 400 users across England and Wales. The toolkit has received excellent feedback from users and subsequently further tools are currently in production.

- Delivery of **events** covering the project’s key work streams with an average attendance of 73 delegates. All events were well attended and satisfaction levels were consistently high (see Appendix 3 for examples of the feedback received). The four events held were:

  - Bureaus, billing and e-issues workshop, held in January 2009. The event was held for London public sector organisations to learn more about best practice energy billing, automating processes and to find out more about bureau services.
  - Energy management and administration best practice, held in April 2009. The purpose of the event was to explore how adopting bureau style services, whether outsourced or delivered internally, could add value to energy management and administration.
  - CRC launch event, held in June 2009. The event was held to mark the launch of the CRC Guide and Toolkit and to provide a real-life practitioners’ view of the CRC and its environmental and financial impacts as well as providing answers to delegates’ questions on implementing the CRC.
  - CRC Festive Cheer, held in December 2009. The event provided an update on changes to the CRC Energy Efficiency Scheme, and enabled delegates to learn more about practical issues surrounding its implementation, i.e. finance, carbon reduction, risk management and operations.

- Development of **fact-sheets** to assist public sector authorities in the decisions taken in their energy procurement. Fact-sheets have covered Automated Meter Reading, Adoption of Flex Contracts, Available Options for Risk Managed Contracts and a series of fact-sheets relating to the CRC. We also developed a fact-sheet on the use of a letter produced by the project for boroughs to use in response to debt recovery letters from energy suppliers, which has already seen boroughs save money that would otherwise have been paid. The fact-sheets have been held up as an example of leadership in the sector by the Office of Government Commerce.

- The Energy Consortium (TEC) was **re-evaluated** against the Specification of Requirements developed in Phase II of the project. TEC did not meet the Specification of Requirements on this occasion. The project has been in contact with TEC throughout Phase III to help them work towards meeting the requirements. LASER and Buying Solutions have worked with LEP on delivering improvements and new products for their customers.

- The project has worked with GS1UK and the utilities industry to develop a new **global XML billing standard** for a multi-site consolidated invoice, with the final version due to be completed in 2010. GS1UK represents major energy suppliers in the UK. The new standard will enable more efficient invoice processing within boroughs that adopt the standard. The UK Government, Cabinet Office have already recognised the new standard through its IT Architecture Board.

- **Customer consultation** was undertaken on the future support required from the LEP and to develop a work plan for the next few years. To ensure the project continues to meet borough needs, stakeholder workshops for energy, finance and procurement managers were held in late 2009 to shape the key deliverables and efficiency challenge.

- The project was **re-branded** providing the project with its own identity. This has helped to promote the project as an independent organisation, providing a source of support and best practice to boroughs and other stakeholders such as suppliers and central government. The project now has a recognisable logo representing clear project aims: Smarter Buying, Less Carbon, A Better Deal.

- The project created the **right conditions for Flex Contracts**, appointing a dedicated Improvement and Efficiency Manager, working with London authorities, energy providers, regulators and policy-makers; hosted focus groups, workshops, guides and online resources for London authorities; met with strategic and operational staff within individual authorities; engaged the Society of London Treasurers. A programme of 13 events, 25 individual meetings and a programme of regular communication supported change in the market.

### 3.2 Key outcomes from Phase III

- **Savings for London** seen through the adoption of recommended contracts. LEP worked with the Pan Government Energy Project to produce a savings methodology for the use of compliant contracts that has been approved by the National Audit Office. The methodology has been used to calculate the savings based on the volume of energy consumed in 2009/10.

- **Adoption of recommended contracts** by the majority of London authorities. The use of aggregated, flexible, risk managed contracts for energy provided by the recommended Central Procurement Bodies (CPB) has been adopted by 28 London boroughs allowing opportunities for savings and efficiencies of approximately 9% on the annual spend on energy by London boroughs.

- **Better products** for the local government market. A framework agreement for automated meter reading is offered by Buying Solutions, which will improve the quality and accuracy of reported data and also provides a benefit to boroughs for the CRC scheme. Customer groups have been formed with the aim of managing suppliers, e.g. bureau and energy management software providers. These will be expanded on moving into the next phase of the project.

- **Increased awareness** of the Carbon Reduction Commitment among Finance Managers, Energy Managers and other relevant officers. The CRC Guide and Toolkit and its subsequent updates have provided officers with the knowledge and tools for councils to aid compliance and mitigate risks. The project is recognised as a leading source to build capability and capacity.

- **Secured major energy supplier support** for the adoption of a global XML billing standard. GS1UK is the standards agency for electronic invoicing and has been working with the project on the development of an XML e-billing standard that will enable transparent invoicing, the ability to process payments more efficiently and a reduction in payment costs. The LEP chairs the GS1UK development board in this instance.

- **National recognition** of the project. The LEP received a Government Opportunities award for Best Procurement Innovation or Initiative. The judges recognised the potential for the project to benefit the public sector throughout the UK.

- LEP is recognised as a **key stakeholder/consultee**. Strategic relationships have been developed with the Local Government Association and the Chartered Institute of Public Finance and Accountancy on energy/carbon efficiency and policy areas. The project has received delegated authority from 31 of the 33 London boroughs, which will allow the project to work with energy providers and suppliers to provide improved services to their customers in London and to lobby central government on behalf of London boroughs.

- LEP represents the voice of local government as a member of the National Collaborative Category Board (Energy) and is actively involved with the delegated Energy & Strategy Team in developing new strategies and improvement programmes for the public sector as a whole.

4. LESSONS LEARNT

4.1 What went well

Through the project to date, London public sector bodies are now better organised for energy procurement in a volatile market.

Management support

- Capital Ambition Efficiency Board has continued to support the project, and we have also continued to receive the support of the Society of London Treasurers and London Finance Advisory Committee. Bringing together relevant internal departments and providing information to key decision makers has been a key route to change.

Strengthening the voice of local authority customers

- The project continues to communicate the requirements of public sector customers in London to service providers. This has enabled the project to directly influence suppliers to deliver a service that better meets the requirements of the public sector. Through this relationship it allows the customers to shape the service provided by suppliers, rather than the service available being dictated by suppliers. Further enhancement of services provided is already being seen, through the project’s influence. This level of engagement with energy procurement providers and suppliers would have been impossible without collaboration, brought about by the LEP.

- The project has used its influence to lobby central government on a number of issues. Through its relationship with the Department for Energy and Climate Change LEP lobbied for an essential change to the CRC to exclude social housing from the scheme. The project also liaised with the Office of Government Commerce to increase transparency and accuracy of the savings calculated through the Pan Government Energy Project’s savings methodology.

Collaboration

- The project has worked with a variety of organisations across its 3 work streams throughout the course of Phase III and has built a resource pool of organisations with specialist knowledge that have provided added value to the project’s work. Work on the Carbon Reduction Commitment has been enhanced through collaboration with the Department for Environment and Climate Change (DECC), the Local Government Association (LGA) and the Chartered Institute of Public Finance and Accountancy (CIPFA).

- The project continues to work closely with these agencies as DECC develops the CRC scheme into its final format prior to its inception. Working with LGA and CIPFA the project has been able to provide a collective voice on behalf of local government authorities across London. Links established with CPB organisations through the project’s work in Phases I and II have also led to the provision of procurement solutions that will be of benefit to authorities in the CRC process, e.g. the provision of an AMR framework agreement by Buying Solutions.

- The project has been working in collaboration with the GS1UK user group on the adoption of a global XML billing standard. The production of the new schema is predicted for October 2010. Development of CRC Guide and Toolkit

- There was great interest in the CRC Guide and Toolkit, with 140 delegates representing organisations from around the country attending the official launch event in June 2009. Likewise the interest in downloading the Guide and Toolkit has been excellent, with over 400 eligible applications to download the document from around the country. All London boroughs have adopted the toolkit.

- Following the excellent reception of the initial event to mark the launch of the toolkit a further event on the CRC was held in December 2009.

- Ongoing stakeholder engagement has enabled the project to target to those areas where boroughs face the greatest challenge or display inefficiencies in order to provide support in relation to the CRC.

Engagement / structure

- The project has been able to bring together finance managers, procurement managers and energy managers through working directly with officers and has been able to bridge the gap that exists between these individuals within boroughs, by running events and borough meetings involving representatives from both sides.

Communications

- The project has continued to reach officers across London through its communications output, including quarterly newsletters and regular e-bulletins.
- The project has delivered presentations and seminars on various topics and has continued to produce fact-sheets providing updates and useful information on the project work streams.
- Our communications have been successful due to the team's ability to engage with many varied stakeholders in London, across the public sector nationally and in the private sector. Several fact-sheets have been developed by the project, providing information and guidance for public sector organisations, covering various topics relevant to the project's work streams. These have been distributed across London and (where applicable) the public sector in England. The success of our communications has stemmed from the fact that they are written by local government for local government, so we understand the needs and issues of local government.

Provision of expert support

- The project has offered a range of support to London public sector bodies, both from public and private sector organisations. This has come in the form of events hosted by the project and presentations to other organisations representing the public sector, e.g. Regional Improvement and Efficiency Partnerships. Delegates have offered positive feedback, indicating that workshops run have been very useful and informative (see Appendix 3 for examples of the feedback received).

Project delivery team

- The project has benefited from an experienced professional team:
  - The Programme Director, Michael Wood, is an experienced Head of Procurement, with a track record of implementing innovative procurement and business improvement initiatives. His drive to ensure that London public sector bodies continually improve performance and achieve best value in their energy procurements is integral to the success of the project. • The Programme Managers in Phase 3 (Joanna Chambers, Emma Cahillane and Richard Le Donne) have contributed extremely professionally and with high impact results.

• For Phase III initiation, the LEP recruited an experienced public sector professional, Amanda de Swarte, to a full-time improvement & efficiency and category management role. Amanda has rapidly established herself as a key resource to the London public sector, supporting bodies to develop business cases for change and working with service providers to deliver improvements.

• The Programme Officer, Shena Aitkenhead, has provided the project with excellent organisational and administrative support, undertaking strong research and data analysis and ensuring that the improvement programme has been recorded and quantifiable.

4.2 What could be improved

The project board The project board has consisted of officers from across the public sector in London, representing London boroughs, Metropolitan Police and the Office of Government Commerce. Throughout the course of Phase III there has been concern from board members as to the role of the board. The board has functioned as a link between the project and its key stakeholders in order to inform them of the key topics for discussion, but has not operated as a decision-making body. The format of meetings has been revised to allow for greater discussion on decisions to be taken.

There was growing concern that the chair of the board was increasingly unable to attend board meetings, and as a result of this the chair stepped down from the post. Two new members representing the Society for London Treasurers/London Finance Advisory Committee were appointed from October 2009, to act as leads on the project and to chair board meetings. Since their appointment the structure of board meetings has improved and the board has a clearer view of its role as an approval body and “critical friend”.

The project will be using the results of the review conducted by PA Consulting plus work with key stakeholders to shape the project moving forward. During this process the format and make up of the board will be reviewed.

Conversely interest from officers in the events and information produced by the project has been high.

Lack of feedback Some boroughs are unwilling to provide details of Central Purchasing Body performance. This makes specifying common needs for improvement more difficult for the project. The use of delegated authority, which has been received from 31 of 33 boroughs, will allow the project to gather information more effectively in order to identify common needs among London boroughs.

Adopting common practice and standards It is essential that London builds on the success of changing procurement processes, but at the moment boroughs are at different points of implementing improvement and change (including a range of energy related activity as well as procurement, e.g. transaction and management). Moving forward boroughs will need to accelerate the ability to adopt more efficient energy practices.

**Low customer expectation**

London boroughs have become used to the poor standards of the utility industry and associated supply chain and therefore do not provide sufficient challenge or demand high quality service, therefore value for money is still a key issue. Additionally, many customers are very dependent on their service providers and reluctant to seek improvements or place too many demands on them. This inertia needs to be sensitively managed and LEP can play an important intermediary role.

## 5. BENEFITS REALISATION

### 5.1 Achievement of objectives in Phase III

| Objective | Progress at end of Phase III | |---------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | To implement the Action Plan and Best Practice Guides to achieve best value and energy efficiency. | Due to the take-up of additional commitments it was not possible to fully develop an Action Plan for Phase III. A new performance review and improvement tool will be developed in Phase IV, incorporating the new challenges faced by boroughs, e.g. the CRC. The CRC Guide and Toolkit produced by the project includes a CRC compliance and best practice tool. The CRC Guide and Toolkit has been downloaded by all 33 authorities and the GLA group in London. The project has developed a number of best practice fact-sheets that looked at a number of different issues relating to procurement and energy management and have provided officers with advice in respect of their decision making processes, as well as providing important information on legislation in a way they can better understand in order to be made fully aware of any issues that may affect them. | | To raise awareness of the benefits of energy efficiency with the aim of improving demand management. | This was not a key priority for Phase III and the project needed to focus its attention on other areas of its objectives, most notably the focus on procurement and the CRC. Moving forward an energy efficiency review for London boroughs is planned, subject to approval. The project influenced the approved Central Purchasing Bodies to set up framework agreements for automated meter reading (AMR) and voltage optimisation. These frameworks will both have a positive impact in reducing energy demand and usage. | To implement the recommendations from the LCE/SECE Energy Review Report published in March 2006.

The two CPBs recommended by the project to provide aggregated, flexible, risk managed contracts were evaluated against the Specification of Requirements developed in Phase II of the project and continue to improve the service delivered. A further CPB was assessed but currently does not meet the Specification of Requirements. To date 28 London boroughs + all 3 organisations in the Greater London Authority have moved or are due to move to flex contracts provided by the recommended CPBs.

The project has influenced boroughs to adopt improved bill validation, either by improving in-house processes or by appointing bureau services to carry out bill validation on their behalf. Savings on erroneous invoices are typically 1-3% of the total energy spend.

The XML e-billing standard should link up better with the financial and energy management platforms that are used by boroughs and therefore increase the efficiency of the process.

Another recommendation was for the improvement of data quality. The use of automated meter reading will improve meter asset management and improve the quality of data reported. The project has worked with Central Purchasing Bodies to offer AMR framework agreements for customers to access and this will also be beneficial in terms of the CRC.

To facilitate the implementation of the Energy Procurement Action Plan across the London public sector, to enable continuous improvements in the 4 specific areas of: e-billing, procurement, terms and conditions and automated meter reading (AMR)

Work on a global XML e-billing standard has continued through Phase III and is due to be finished in Phase IV. The development of a global standard will bring a number of benefits in terms of process efficiency, cost savings through support of fewer standards and the ability for suppliers to develop added value billing services for customers. | Objective | Progress/Details | |--------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------| | As discussed previously 28 London boroughs + all GLA functional bodies have moved or are due to move to flex contracts. | LEP has worked with Buying Solutions to offer an AMR framework agreement which is now operational. | | To continue to work with at least three Central Purchasing Bodies (CPB) to develop recommended procurement options and continuous improvements on their capability to deliver these, to provide choice and confidence of best practice to London public sector bodies | Two CPBs have met the specification of requirements. The project continues to work with a third CPB in order to meet the LEP requirements. Strategic supplier engagement has already begun with the two CPBs recommended by LEP, and energy suppliers to discuss savings. These meetings are to become a regular event through the next phase of the project. | | To facilitate the adoption of LEP recommended contracts by August 2009 | The measure for this objective was for 40% of gas and electricity contracts that could be renewed by August 2009 to be on recommended contracts. 28 of the 33 London boroughs now use flexible procurement for provision of their gas and electricity, with a further borough using a mixture of flexible procurement and fixed term, fixed price arrangements. | | To enable participating bodies to demonstrate cost efficiencies through adopting recommended risk managed contracts | The project has been in contact with the OGC to ensure robust, transparent savings data are available for London. We will work with CPBs to introduce borough level savings statements. | | To continue to promote non-procurement efficiency initiatives, enabling participating bodies to achieve further efficiency gains | The project has identified potential monetary (cashable and non-cashable) and efficiency savings of £10.7m that may be achieved through the adoption of promoted best practice non-procurement efficiency initiatives (see Appendix 2 for details [excluding adoption of aggregated flexible contracts]). | | To recommend category management arrangements for energy in the London Public Sector beyond the end of the | Consultation was held in Phase III on the future of the project, examining the role, aims and objectives of the project and | | Project | focussing on the issues relating to energy that will affect London moving forward. The work in this process was used in the planning of the next phase of the project to focus the project’s attentions on those areas of work that will be of greatest benefit and relevance to boroughs. As part of this process the project commissioned PA Consulting to formulate the planning for the next phase and ongoing project arrangements, including looking at the arrangements in the event that the project comes to an end. | |---|---| | To develop a guide and toolkit on the Carbon Reduction Commitment (additional) | This objective was taken on whilst Phase III was in progress. The Guide and Toolkit was launched in June 2009. Since its launch the document has been updated to reflect the changes to the scheme issued by central government. The project has worked with the Local Government Association and Chartered Institute of Public Finance and Accountancy to lobby central government on the content and methodology of the scheme. The project has also kept officers informed of key changes that have been issued throughout the evolution of the scheme. All London boroughs have downloaded the toolkit, with over 400 requests from across England and Wales in total. Feedback on the Guide and Toolkit has been excellent and the project is aware that London boroughs are using the toolkit in their CRC preparations. Two further CRC tools are planned for 2010/11 subject to available funding | 6. ONGOING ARRANGEMENTS

The project has gone through a review process in the current stage of the project in order to plan the next stage. A project initiation document has been produced and a project plan has also been developed, providing details of future arrangements.

Looking forward to 2010-13 there are a number of requirements for London that the project will aim to address, discussed below.

- The need to adopt a category management approach to energy procurement, improving supply chain management of current service providers (CPBs).
  - This will be delivered through LEP as a unified point of contact, aiming to ensure that CPBs deliver a high quality service. To achieve this, LEP will need to educate CPBs to understand their roles as service providers rather than as “clients”, which has historically been the case.
- To ensure that customers improve their processes across procurement, energy management, invoice and payment processes and increasing electronic transaction, partly through the adoption of the new XML e-billing schema.
- To continue to provide leadership and sector support on the CRC. Additional toolkits are planned, for energy and finance activities, including best practice carbon trading.
- To provide pan-London strategic approaches for energy demand reduction and public sector asset management. Work is proposed to identify opportunities for capital investment and collaborative arrangements for technology implementation.
- The need to provide a continued unified voice to central government, particularly at this time of budget pressure and introduction of new policies and regulations.
- To provide proportionate and directed leadership, providing peer review and acting as a critical friend, to support boroughs make efficiencies and savings in a highly complex and challenging environment.

Our aim is to extend the opportunity for savings and efficiencies that boroughs can achieve by adopting LEP’s best practice recommendations to £35m per annum against CSR 2007 targets (see Appendix 2).

The report resulting from the independent review into the project’s effectiveness commissioned by Capital Ambition concluded that the project “delivers significant tangible benefits across London’s Public Sector” (Review of London Energy Project, January 2010, PA Consulting Group). The review by CIPFA commissioned by Capital Ambition noted that “This project appears to offer an excellent return for the investment made” (Review of CA14, London Energy Project, CIPFA).

A long-term future for LEP is sought and the outcome of a Capital Ambition review in long-term hosting and funding options for the project is awaited. 8. ACKNOWLEDGEMENTS

The LEP would like to acknowledge the participation of the following organisations in support of the project:

**LEP Project Board**

- Society of London Treasurers (represented by LB Bromley and LB Camden)
- London Boroughs Energy Group (represented by LB Camden and LB Hackney)
- London Contracts and Supplies Group (represented by LB Tower Hamlets)
- Capital Ambition
- Office of Government Commerce
- London Universities Purchasing Consortium
- Metropolitan Police Authority
- London Fire and Emergency Planning Authority (represented by FireBuy)

**Pan Government Energy Project**

- Office of Government Commerce
- Ministry of Defence
- Department for Energy and Climate Change plus other Pan Government Energy Project participants.

**Strategic Partners**

- Chartered Institute of Public Finance Accountants
- Local Government Association
- GS1UK

**Suppliers**

- Buying Solutions
- LASER

**External Consultants**

- Pulse 24
- Rubus Consulting
- PA Consulting APPENDIX 1 – BOROUGH ARRANGEMENTS

Contract Buying Arrangements Aug 2007

Confirmed Contract Buying Arrangements June 2010

Smarter buying. Less carbon. A better deal. APPENDIX 1 – BOROUGH ARRANGEMENTS

Delegated Authority signatories February 2010

- Signed delegated authority letter received by LEP
- Borough has not signed delegated authority letter
- Signed delegated authority letter pending

## APPENDIX 2 – BENEFITS OVERVIEW 2010/12

\**London can achieve efficiencies and savings worth £35.7m* p.a.\*\*

LEP provides leadership and challenge across a range of procurement and transaction activities. It identifies new opportunities, builds strategic capability & implementation plans for best practice procurement & carbon management. LEP’s common sector approach is a proven route to achieving excellence and value for money.

### Pan-London benefits available

| Estimated savings per year | Strategic development | Improvement tools | |----------------------------|-----------------------|-------------------| | **£25m** From all Borough adoption of aggregated flexible contracts | **Best Practice Procurement** | **Consultancy & strategic planning** | | **£6.5m** From all Borough adoption of CRC solutions | • Introduce new products & services & improve CPB performance | • Independent review strategy, operations, savings potential & borough level recommendations | | **£3.7m** From all Borough adoption of finance improvements | • Identify new procurement & risk management strategies | • Self Assessment action plan and programmed routes to best practice in energy management, payment practice & CRC | | **£0.5m** Value of common improvement resources available for all boroughs | • Strategic supplier development | **Sustainability & carbon** | | A unified approach to the supply market & borough improvements | • Resources for CRC compliance & reduced consumption | • Manage relationships with strategic bodies | | | • Carbon trading risk management solutions | • Effect change in policy & regulation | | | • Pan-London best practice & energy efficiency measures | • Consultation response on energy-related issues as a recognised centre of expertise | | | • Align carbon and cash savings | **Influencing policy development** | | | **Process efficiency & improvement** | **Collaboration, knowledge-transfer & best practice** | | | • Define best practice in bill validation & energy management reporting | **Best practice procurement** | | | • Improve provider data quality & management information | • Use recommended aggregated, risk managed, flexible contracts | | | • Develop the optimum approach to processing & paying high invoice volumes | • Identify & move sites on to corporate contract | | | **Sustainability & carbon** | • Monitor the performance of CPBs, utility suppliers and your own operations | | | • Treat energy efficiency & carbon reduction as a corporate issue | • Report problems & opportunities to LEP for pan-London benefit | | | • Minimise risks & adopt LEP’s carbon trading recommendations | **Process efficiency & improvement** | | | • Follow proven best practice, reduce consultancy requirement & use our CRC tools & audit scheme | • Reduce paper bills, individual site payments and associated costs | | | **Influencing policy development** | • Adopt consolidated electronic bill validation standards to eliminate erroneous invoices | | | • Manage relationships with strategic bodies | • Streamline energy and financial management systems & process | | | • Effect change in policy & regulation | **Strategic planning** | | | • Consultation response on energy-related issues as a recognised centre of expertise | • Align energy management to other corporate priorities and efficiencies | | | **Collaboration, knowledge-transfer & best practice** | • Use our Self-Assessment Action Plan & efficiency programme | | | • Training, events & focus groups | • Act swiftly on non-compliance | | | • Factsheets, guides, bulletins & newsletters | • Ensure LEP represents your interests with industry & government initiatives | | | • Change management support & individual borough capacity-building | **Process efficiency & improvement** |

\*Against CSR 07 targets

**Borough action needed to secure available savings**

- **Best practice procurement**

  - Use recommended aggregated, risk managed, flexible contracts
  - Identify & move sites on to corporate contract
  - Monitor the performance of CPBs, utility suppliers and your own operations
  - Report problems & opportunities to LEP for pan-London benefit

- **Sustainability & Carbon**

  - Treat energy efficiency & carbon reduction as a corporate issue
  - Minimise risks & adopt LEP’s carbon trading recommendations
  - Follow proven best practice, reduce consultancy requirement & use our CRC tools & audit scheme

- **Process efficiency & improvement**

  - Reduce paper bills, individual site payments and associated costs
  - Adopt consolidated electronic bill validation standards to eliminate erroneous invoices
  - Streamline energy and financial management systems & process

- **Strategic planning**

  - Align energy management to other corporate priorities and efficiencies
  - Use our Self-Assessment Action Plan & efficiency programme
  - Act swiftly on non-compliance
  - Ensure LEP represents your interests with industry & government initiatives APPENDIX 3 – EVENT FEEDBACK

Examples of feedback received from events held in Phase III are detailed below.

**Bureaus, billing and e-issues workshop, January 2009: 32 feedback forms returned** Do you expect to make use of the information shared at this session? Yes: 29 Partly: 2 Possibly: 1

**Energy management and administration best practice, April 2009: 15 feedback forms returned** Do you expect to make use of the information shared at this session? Yes: 15

**CRC Festive Cheer, December 2009: 24 feedback forms returned** Do you expect to make use of the information shared at this session? Yes: 21 Partly: 3

Some quotes from delegates at our workshops:

- “What an excellent event yesterday. It was really well attended and you had an excellent range of speakers.”
- “Exceeded my expectations, most informative so far!”
- “Very much focused on local authorities, which was very good”
- “Excellent presentations, lots of really useful information and practical guidance”
- “Once again a very useful seminar, very well organised and presented. As always, thought provoking and informative.”
- “Very useful and informative - particularly on updates/changes to CRC requirements” APPENDIX 4 – STAKEHOLDER MAP

London Energy Project Stakeholders

- Capital Ambition
- LEP Team
- London Authorities
- Director Networks
- Finance Directors (SLT)
- Environment Directors (LEDNET)
- Local Authority community in England & Wales
- Advocate bodies
- Utilities Suppliers
- Pan Government Energy Project
- RIEP network
- Public Buying Organisations
- Programme Director
- Programme Manager
- Change Manager
- Programme Support
- Energy Managers
- Procurement Managers
- Finance Managers
- Flex Contracts SoR input
- evaluating providers: adopting new products; identifying benefits; sharing good practice; technical and management accounting
- supporting change; influencing decisions
- providing a hub of CRC expertise and solutions
- coordinating requirements and standards for shared services
- extended strategic representation
- LGA CIPFA
- greater transparency; responding to new tendering arrangements; addressing wider service issues
- disseminating learning and innovation; shaping policy and practice
- adopting learning and innovation
- responding to requirements; agreeing service standards; reorganising customer service and account management
- provide expertise on energy and Carbon Reduction Commitment to inform wider policy work
- commitment to change; activating stakeholders; educating the market; encouraging dialogue CPB Flex Contract Savings for London

1.1 Total Savings Using the current Pan-Government Energy Project (PGEP) approved savings methodologies, against the \*incomplete volumes of energy consumed - the total combined savings for Laser and Buying Solutions customers for April 2009-March 2010 are:

| | Amount | |----------------|--------------| | Laser | £14,095,434 | | Buying Solutions| £2,372,166.45| | **GRAND TOTAL**| **£16,467,579.45** |

1.2 The savings figure is based on the volumes of electricity and gas that London boroughs consumed through LASER and Buying Solutions compliant contracts, within full or part year 2009/10 (dependent on the date they joined the compliant arrangements). \*The figures do not include benefits generated by LB Greenwich and Southwark, as these have not delegated authority to LEP to receive and/or analyse their data. (The figures are based against 2007 CSR targets.)

1.3 Provisional estimates for savings of up to £15.82 million were anticipated, although this was dependent on the volumes boroughs were committing to the new flex contracts, which was unknown. (see CIPFA review information)

1.4 This current savings methodologies suggest an average of:

- 3.0% through aggregation – reduced supplier margin and cost to serve,
- 0.5% by switching from fixed to flex - reduced supplier risk premium and 4.7%\* commodity price savings against the market average. (\*An average of 6.5% was achieved in 2008/9.)

2.1 LASER Savings of £14,095,434 have been delivered and are calculated using approved PGEP factors for the actual volumes of electricity and gas consumed under Purchase In Advance (PIA) and Purchase Within Period (PWP) contracts 2009/10 financial year.

Four factors have been used PIA Gas, PIA electricity, PWP Gas and PWP electricity.

| Volume | Saving | |-----------------|-----------------| | Electricity | £5,313,467.00 | | Gas | £8,781,967.01 | | **TOTAL** | **£14,095,434** |

2.2 LASER Savings Breakdown

a. This figure does not represent the full savings, as all Southwark and Greenwich volumes are excluded. b. Savings are derived from electricity contracts for 17 boroughs and gas contracts 14 boroughs. c. Of these contracts 14 boroughs began electricity contracts mid-way through the year and 7 boroughs began gas contracts mid-way through the year, i.e. the savings figures do not cover an entire year volume for many boroughs.

d. LASER still provides fixed term, fixed price contracts, which are not included in any savings figures. These accounted for 145million kWh of electricity and 627million kWh of gas, which could provide further savings through switching to flexible, aggregated, risk managed contracts.

3.1 Buying Solutions Savings of £2,372,166 have been delivered and are calculated using approved PGEP factors for the actual volumes of electricity and gas consumed under Flexible locked contracts 2009/10 financial year.

Three factors have been used Flexible locked Gas, Flexible locked Non-Half Hourly electricity, Flexible locked Half Hourly electricity.

| Volume | Saving | |-----------------|----------------| | Electricity | £1,984,360.14 | | Gas | £384,975.00 | | TOTAL | £2,372,166 |

3.2 Buying Solutions Savings Breakdown Savings are derived from electricity contracts for 7 boroughs and Transport for London and gas contracts for 5 boroughs.

a. The London Borough of Southwark has moved some large gas supply to flexible contracts from April 2010.

b. The Royal Borough of Kensington and Chelsea and the Metropolitan Police will begin contracts in April 2011.

c. London boroughs of Lambeth and Lewisham have October 2010 start for gas and electricity and London Borough of Tower Hamlets gas only.

4.1 Future Savings Challenges

- Deliver savings against new baselines established for 2009/10, which will be a real challenge given this was a year when energy prices were very low and supplier margins already substantially reduced through aggregation.
- Ensure that compliance criteria and savings methodologies for buying organisations are robust, transparent, accurate and appropriately provided to Capital Ambition and London customers
- Identify new savings opportunities, such as power purchase agreements, renewable heat incentives and feed-in tariffs CIPFA Review – Energy Procurement

Procurement savings information provided to CIPFA for Capital Ambition Review:

1. 25 boroughs now use aggregated, flexible, risk managed contracts. The OGC estimates cost savings of 8.7% can be achieved from switching to flexible and risk managed procurement, through aggregation, risk premium avoidance and flexible commodity procurement. The energy costs across London are approximately £300m. However, most boroughs have sites that are not using these contracts, e.g. schools. If an assumption is made that the costs can be divided equally between boroughs, the total for the 25 boroughs would be £300m / 33 x 25 x 80% = £182m.

2. On average 20% of each borough’s expenditure is not using the compliant contracts, by moving 10% of each of the 25 boroughs portfolio onto compliant contracts a further £1.97m could be realised.

3. Power purchase agreements will present an opportunity for further savings and longer-term budget stability, if the remaining 10% of 25 boroughs were to enter PPA, this presents a further £1.977m. a. The current identified saving opportunity is 8.7% x £182m = £15.82m. b. POTENTIAL - All borough adoption for all sites would be 8.7% x £300m - £26.1m c. Detail for 2009-10 financial year will be provided after May 2010, (NB. Not all of the 25 boroughs will have had a full year of flexible purchasing, so full benefits may not be accrued until financial year 2010-11)

4. Further costs will be saved in avoidance of OJEU tender processes to procure energy - These are not quantified and are dependent on the internal processes of each organisation.

5. Staff time saved on procurement activity and internal decision making processes - If an estimated 5% FTE per organisation is assumed, e.g. this equates to 5% x 33 x £60k (energy manager salary, incl. on-costs) a. £99k cost saving across all boroughs LONDON ENERGY PROJECT - KEY BENEFITS SUMMARY

In terms of future savings predictions, a number of assumptions have been made, which will undoubtedly change in 2010-12, i.e. the re-baselining of savings against 2009/10 (a very low commodity priced year), expected changes to the current savings methodologies, underlying future energy price changes and balancing fees. This may be balanced by newly identified savings in other areas.

- Boroughs to expect improved performance and transparency from service providers and utility suppliers and escalate ‘non-compliant’ behaviour
- Boroughs to adopt common specified standards as they are developed

Cashable financial savings through reduced energy costs Qualitative improvements in customer service Forecast savings £17.72m

Move all London boroughs and all sites (where appropriate) to recommended contracts. All boroughs all site adoption £26.1m. With an average spend of £200m and an average of £1.977m (25 authorities) or £2.31m (28 boroughs), Power Purchase Agreements offer potential for reduction in energy costs and long-term budget stability. Transferring 10% of the 25 to 28 authorities’ volumes to PPA provides potential annual savings of £22.0m.

- Boroughs to migrate and/or continue the use of “compliant” flexible contracts
- Boroughs to ensure the energy and financial databases to identify sites that are not on “compliant” contracts
- Boroughs to move non-“compliant” sites onto corporate “compliant” contracts
- Boroughs to ensure new buildings and meters are added to “compliant” contracts
- Boroughs to encourage schools use of “compliant” contracts
- Boroughs to commence use of new opportunities as they arise, PPA, FITs, RHs

Cashable financial savings through reduced supplier charges and energy costs. Forecast savings £4.4m

Work with 2 suppliers to develop programme of initiatives that enable customers to benefit from discounts and lower energy costs. Robust to other strategic suppliers during 2011.

- Boroughs to make full use of LEP’s CRC tools and training and reduce consultancy requirements
- Boroughs to use recommended carbon trading solutions for managing the risk of carbon trading, both at pan-London and Borough levels

30 boroughs to register and comply with CRC 30 boroughs to use LEP’s CRC module for financial management 25 boroughs to use LEP’s CRC module for financial management

Benefits are delivered through cost avoidance (CRC penalties) and risk management (CRC non-compliance) and reduction of consultancy requirement. Cashable savings are captured below

- Boroughs to develop best practice accountancy procedures and model templates for allocating costs for CRC

- Boroughs to develop best practice approaches and solutions for reducing pan-London energy consumption

- Identify and implement solutions for managing the risk of carbon trading, both at pan-London and Borough levels

- Develop best practice approaches and solutions for reducing pan-London energy consumption

- Identify and implement solutions for managing the risk of carbon trading, both at pan-London and Borough levels

- Develop best practice approaches and solutions for reducing pan-London energy consumption

- Develop best practice approaches and solutions for reducing pan-London energy consumption

- Conduct a Pan-London health check of good practice and opportunities for energy efficiency measures

- Develop case studies, business cases and a change management programme to support borough adoption of carbon management

- Work with funding bodies to simplify access to funding for energy/carbon reduction

- Identify and support the practical implementation of energy efficiency measures

Reduced carbon footprint and CRC liability Reduced risk of non-compliance with new legislation

30 boroughs to register and comply with CRC 30 boroughs to use LEP’s CRC module for financial management 25 boroughs to use LEP’s CRC module for financial management

Assuming risk managed carbon trading achieves the same savings level as achieved in energy buying (8.7% net), 25 boroughs to adopt recommended best practice trading

- Boroughs to make full use of LEP’s CRC tools and training and reduce consultancy requirements
- Boroughs to use recommended carbon trading strategies and/or service provider

The net cost of carbon to each authority (pre-2013) under the new CRC regulations is assumed to be £215k (allowance purchase, recycling bonus/penalty and administration), £255k (capital bid to Capital Ambition for energy efficiency funding)

£200m x 2% = £4m. A pan-London review of CRC and energy management opportunities is planned, to develop a clear view on activities that are working well and could be rolled out to other organisations. This would include a strategy, aggregated procurement of technology solutions, business cases and change management approach.

Item B Appendix C LONDON ENERGY PROJECT - KEY BENEFITS SUMMARY

**Process efficiency and improvement**

- Maximise cost recovery from erroneous invoicing through best practice bill validation and energy management data use
- Improve data quality and management information from suppliers and service providers to manage CRC and consumption risks
- Boroughs to introduce bureau style bill validation practice. A 1% reduction in energy charges produces forecast cashable savings of £3m. Additionally, borough activities such as changes to profile class, reduction in MD/KVA/AQ/SOQ and charges circa £30k per borough
- Boroughs to record savings and report to LEP
- Boroughs to introduce consolidated billing systems and links to financial management systems
- Boroughs to introduce early payment and/or direct debit payments to receive supplier discounts
- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Estimated savings £3.7m p.a. pan-London**

**Key benefits**

- Produce best practice methodology for bill validation
- Develop savings methodology
- Work with providers towards meeting minimum service standards and introduce key performance targets
- Specify pan-London common report formats
- Borough services available via approved solutions
- In-house borough adoption of bill validation standards
- Cost recoveries from erroneous invoicing 1% of value
- Forecast savings of £3m
- Carbon and financial savings through demand reduction
- Better management of CRC risks by improved accuracy of consumption records
- Key enabler for borough adoption of energy management and payment actions
- boroughs to introduce early payment and/or direct debit payments to receive supplier discounts
- boroughs to introduce bureau style bill validation processes
- boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- boroughs to record savings and report to LEP

**Reduce costs by implementing the optimum approach to processing and paying high volumes of energy invoices**

- Complete global standard XML billing schema design
- Develop the business case and implementation plan for adopting consolidated electronic invoices and payment by authorities
- Develop implementation strategy for XML schema adoption
- Cashable financial savings through reduced payment and administration process costs
- Improved financial management
- Forecast savings are £697k pan-London p.a.
- New electronic billing standards to be rolled out from April 2011. Current processes requiring mapping before savings can be confirmed.
- 5 boroughs to implement full automated consolidated electronic energy management, invoice processing and payment.
- Boroughs to introduce consolidated billing systems and links to financial management systems
- Boroughs to move from paper-based, site based, or manual bill/data entry to consolidated and automatic processing boroughs to introduce early payment and/or direct debit payments to receive supplier discounts.
- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Estimated value £5.5m pan-London**

**Key benefits**

- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Realise benefits and assess borough energy management effectiveness and routes to excellence through a self-assessment and improvement plan**

- Revise self assessment improvement action plan to support boroughs benefits realisation (covering gas, electric, asset, data and energy management, governance, payment practice)
- Support authorities to complete self assessment process
- Use findings to develop case studies and business case to encourage Pan-London improvements, efficiency gains and savings
- Support authorities in defending claims from suppliers to recover debt where insufficient supporting information is provided
- Support adoption of direct debit and shorter payment terms
- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Conduct an independent borough based audit to support boroughs understanding of their readiness for CRC and identify effective pan-London carbon management opportunities**

- Provides a clear picture of pan-London CRC costs, risks and opportunities
- Enables boroughs to deal with non-compliance issues promptly
- Enables boroughs to focus resources for maximum effectiveness
- Builds a pan-London picture of priority areas to manage cost and reduce energy consumption
- Enables buying organisations to deliver frameworks for suitable technologies
- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Collaboration, knowledge sharing & support and influencing policy development**

- Change management and support and individual borough level, accelerates improvements and the ability for boroughs to realise benefits development offered “free” to boroughs
- Practical tools to support officers conduct their roles efficiently
- Effective representation with policy makers and regulators, ensuring pan-London needs are recognised
- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Estimated value £2.8m**

**Key benefits**

- Boroughs to introduce bureau style bill validation processes
- Boroughs to make checks on charges such as KVA and ask suppliers for cost reduction where appropriate
- Boroughs to record savings and report to LEP

**Quality assured benchmarking of current energy management practice means a Borough can manage corporate risks and implement proven best practice. This facility is estimated to save £0.5m pan-London.**

**Item B Appendix C** Subject: Carbon Reduction Commitment – Pan-London Review

Report by: Michael Wood – Programme Director

Agenda item: 9

michael.wood@haringey.gov.uk

Strategic Theme: Energy efficiency Pan-London opportunities, Carbon Reduction Commitment cost avoidance

Purpose: This report is intended to provide the Board with:

- Sufficient evidence to authorise a Carbon Reduction Commitment peer review (Healthcheck) service to ensure individual boroughs comply with scheme and avoid costs / inefficiencies
- Sufficient evidence to approve a Pan-London review of energy efficiency measures and opportunities assessment of further potential savings and benefits
- The need for LEP to lead in this new area and support best practice within boroughs
- Sufficient evidence to authorise project costs. This is made up from LEP keeping £27k income generated in 2009/10 from licensing the first CRC module to all RIEPs and HE sector and the Board authorising the release of an additional £20k.

Financial implications:

Budget issues outlined in further detail at Appendix 1

| Financial Year | Existing Project Allocation £ | Committed to date £ | Spend to date £ | Balance £ | Funding/Additional Funding Request £ | Total Existing Funding + New Funding Request if applicable £ | |----------------|-------------------------------|---------------------|-----------------|-----------|-------------------------------------|----------------------------------------------------------| | 2010/11 | **221,715.33** | £178,000 | £19,333.22 | £24,382 | £20,000 | £241,715.33 | | | **Total** | | | | | |

\*\* This figure includes £27k income generated from distribution of CRC support to RIEP network, which has not been returned to Capital Ambition.

Please also note, that two further planned CRC toolkits are currently unfunded due to uncertainty of funding from the wider RIEP network (outlined as Appendix B)

Executive summary:

All London boroughs will qualify for the CRC Energy Efficiency Scheme, and it is expected that most councils will pay an average of £500,000 in April 2011 and 2012 for fixed cost allowances at £12 per tonne in the introductory phase. After this period the costs are harder to predict due to the introduction of a full cap and trade scheme.

Stakeholder consultation conducted in July 2010, demonstrated that many authorities still lack the practical experience necessary to confidently comply with the initial stages: only 30% felt confident they had sufficient data to comply with the September 2010 registration deadline, 30% felt they could forecast their carbon emissions, 20% believed they had sufficient budget committed to register and purchase allowances, 50% believed executive teams understood their role within CRC.

To fill this gap, LEP has developed a process to independently peer review individual organisation’s CRC preparations, help ensure compliance, mitigate risks and recommend improvements, 90% of borough energy managers felt they required this support. To maximise the value of the ‘Healthcheck’, an assessment of the efficacy of current energy efficiency measures will be conducted, identifying best practice and opportunities for Pan-London savings and capital investment.

The individual reviews will be aggregated to deliver a Pan-London report on London’s preparedness for CRC, the current energy performance of London’s public buildings and an analysis of the efficiency measures that could most improve energy efficiency. It will also provide a picture of the DEC and EPC ratings achieved by London. Borough level information will be analysed across energy efficiency actions already implemented; their outcomes, including carbon and cashable savings plus; future actions planned and; barriers to change.

Overall, the aim is to establish those projects delivering the best results and to share the combined experience of boroughs. In reality, the measures available to improve energy efficiency and deliver cash savings are likely to be similar across a wide range of building types. By using this data, London has an objective method of assessing available opportunities as well as assessing and targeting those measures that can be most cost effectively employed, especially when comparing the list of needs to the results obtained from actual borough projects already undertaken. This analysis should highlight the potential for future capital investment, collaborative procurement and probably lead to the development of other LEP/CA projects, which will accelerate change Pan-London and the potential to realise further savings, including newer opportunities, such as Feed In Tariffs (FITs).

At borough level, the aim of the CRC Health Check Service is to mitigate the costs, penalties and other risks associated with the new CRC Energy Efficiency Scheme prior to registration and to support borough compliance through an independent Red Amber Green (RAG) based assessment of preparation, future planning and operations conducted to date. A bespoke report summarising the findings and highlighting any errors, omissions or areas of non-compliance will be delivered to the borough during a face-to-face meeting.

As the CRC is more than a compliance exercise, the proposed CRC Health Check will additionally review an organisation’s preparation for managing its obligations under CRC and where necessary suggest areas for improvement to support senior management team decision making and resource allocation.

The Health Check will be conducted by an independent specialist using an LEP approved format. The assessment process includes telephone interviews with relevant officers and managers, a borough questionnaire, a self-assessment across a range of CRC activities and the provision of energy management data. The consultant will conduct a desktop review of the information returned and gathered during interviews to ensure that the borough’s assessment of qualification is correct and that the information collated for registration complies with the regulations and that their preparations for ongoing CRC management and energy reduction are adequate. Where good practice is observed this will be transferred to other boroughs to enable effective and efficient management. Project Outcome(s):

- The risks and costs of non-compliance Pan-London will be managed through a consistent risk-based assessment of borough CRC preparation and energy efficiency measures.
- Capital Ambition will receive a clearer picture of the types of energy efficiency measures that have been implemented, the benefits realised by organisations, barriers to implementation and the integration of energy efficiency performance in asset management.
- Use of resources will be improved through analysis of actual projects and their actual outcomes, and subsequent recommendations for common improvement and savings opportunities, including Pan-London collaborative procurement of solutions.

Key Risks:

- Insufficient take-up at individual borough level, if the service is not free\* at point of delivery, leaving risk exposure to boroughs and insufficient data to provide a representative sample for pan-London review
- Delay to service delivery, registration is due to be completed by 30 September 2010
- Possibility of further last-minute changes to the scheme under the new administration

Recommendation:

That the Board:

(i) Approves the retention of the £27k income generated to part-fund this project and release an additional £20k to fully cover the costs of the Health check and Pan-London review; and

(ii) Promotes take-up of the Health check service through Society of London Treasurers and London Environment Directors Network.

Appendices:

Appendix A: Budget Issues Appendix B: Planned CRC Support tools Appendix C: PID

Background papers: None | Description | Amount | |-----------------------------------------------------------------------------|------------| | TOTAL C/F from 2009/10 | £72,715.33 | | 2010/11 funding | £149,000.00| | **TOTAL for 2010/11** | **£221,715.33** | | 2010/11 Spend | | | April | £9,603.03 | | May | £9,730.19 | | **Total** | **£19,333.22** | | **Amount remaining** | **£202,382.11** |

**June 2010 onward commitments**

| Description | Amount | |-----------------------------------------------------------------------------|------------| | Staff | £100,000.00| | Communications | £10,000.00 | | Events, workshops, knowledge transfer | £18,000.00 | | legal | £5,000.00 | | Operating general | £3,000.00 | | Misc expenses and project costs | £2,000.00 | | **Self-Assessment Improvement Plan** | **£40,000.00** | | **At risk projects** | | | CRC Finance module (CIPFA) | £26,200.00 | | CRC Toolkit module 2 | £24,000.00 | | CRC/Pan-London review | £47,700.00 | | **Total** | **£97,900.00** |

**Required project budget**

| Description | Amount | |-----------------------------------------------------------------------------|------------| | **Total** | **£275,900.00** |

**Assumptions**

- Request addn £20k for Pan-London review: £20,000.00
- Income from RIEPs £60k: £48,000.00
- Amount remaining: £202,382.11
- Projected Operating budget: £270,382.11 CRC Toolkit module 2 - A Local Authority Guide to managing the Introductory Phase

The principal focus of this module is to support early years participation and is aimed like the first guide, at those who have direct responsibility for managing the CRC scheme. It aims to identify and mitigate the risks and costs associated with the early years of the CRC scheme and ensure current users can continue approaching the CRC in a systematic best practice manner, sharing tools and techniques across the local government, police, fire and higher education sectors.

It is designed to support CRC participants to manage their ongoing obligations and prepare for forecasting and managing emissions in the three year introductory phase. In addition, the new module will also incorporate an audit process to allow assessment of an individual organisation’s CRC management.

Adding to the existing CRC Toolkit and Guide this new module delivers guidance, further tools and checklists to support organisations in managing their obligations through the early years of the scheme’s introduction. As a minimum we will deliver the following elements

01. A best practice manual based on the existing format provisionally entitled "CRC Energy Efficiency Scheme – A Local Authority Guide to managing the Introductory Phase"
02. Outlines of potentials costs, liabilities and risks to boroughs, based on example scenarios
03. Compliance and best practice checklist
04. Example procedures and business cases for the adoption of each early action metric;
05. a strategy for the installation and effective use of Automated Meter Reading (AMR), including cost recovery of supplier pass-through costs, etc
06. recommended best practice methods to forecast emissions, dependent on data sources and quality
07. straightforward best practice methods of and LA feedback from managing the registration, carbon footprint, annual reporting processes and carbon and risk management planning (strategic and corporate issues)
08. outline other LA experiences in managing the complex portfolio and legal/ownership issues from gathering the necessary data for carbon footprint, annual reports and the collation of an compliant evidence pack
09. simple methods of determining and explaining carbon abatement costs
10. template reports, presentations and business cases for internal and external key stakeholders and decision makers CRC module 3 - A Local Authority Guide to managing finance, risk and carbon trading

The principal focus of this module, which is delivered through a partnering arrangement with CIPFA is to provide finance and CRC managers with a clearer understanding of the financial activities related to CRC accounting practices, carbon allowances and CRC bonuses and penalties.

To improve effective and efficient planning, decision making and risk/cost reduction, best practice methodologies for the redistribution of funds within the scheme, including reallocating funds within the schools estate, general management and technical accountancy practices will be developed.

To increase the prospects of benefiting from carbon trading, recommendations based on a strategic evidence based evaluation of the financial aspects of the CRC, risk assessment of carbon trading strategies and/or models including legal implications, analysis of the potential to act in groups or outsourced trading will be provided.

Resources to provide public sector CRC participants with appropriate guidance, models and tools will include:

1. A best practice manual provisionally entitled "CRC Energy Efficiency Scheme – A Local Authority Guide to managing finance, risk and carbon trading"
2. effective and efficient solutions for managing costs and risks associated with CRC carbon trading
3. clarity on accepted accounting practice and describe best practice approaches to accounting and reporting for CRC
4. example methodologies and tools for redistributing CRC bonuses and penalties, corporately and within the schools estate
5. an evaluation of carbon trading approaches and strategies and an assessment of the risk / legal aspects associated with trading (derivatives, swaps and ultra vires assessment)
6. options in respect of pan-sector CRC carbon trading

Two free workshops will be delivered by CIPFA for London boroughs. PLEASE NOTE: Capital Ambition does not support projects that benefit single authorities. Proposals should usually be joint submissions or be submitted by a lead partner on behalf of others. In exceptional circumstances Capital Ambition may support a bid but it must demonstrate specifically the value of outcomes and learning and how it can then be transferred to other organisations.

Revision History

| Version | Created | Reasons for/Summary of Changes | Author | |---------|-----------|--------------------------------|-----------------| | V 0.1 | 28 May 2010 | | Amanda de Swarte | | Title of Project/Feasibility/Research Study | Lead Authority: | |------------------------------------------|-----------------| | Carbon Reduction Commitment – Pan-London review of strategy and operations | London Borough of Haringey | | Other partners involved in submission of Bid: | London Energy Project (on behalf on London boroughs) |

| Name of Project/Contract Manager: | Contact Details of Project/Contract manager: | |----------------------------------|---------------------------------------------| | Amanda de Swarte | Amanda de Swarte, 020 8489 1102 |

| Is this a Feasibility/Research Study? (Yes/No) | Amount of Funding Request Year 1 | |-----------------------------------------------|---------------------------------| | No | Capital N/A | | | Revenue £47,760k (Additional £20k). LEP has £27k, derived from the RIEP network for the provision on CRC toolkit, module 1 |

| Planned Start date: | Amount of Funding Request Year 2 (if applicable) | |---------------------|--------------------------------------------------| | July 2010 | Capital N/A | | | Revenue |

| Length of Project/Feasibility or Research Study: | Total Funding Requested | |-------------------------------------------------|-------------------------| | 4 months | £20k |

1. Background/Context

The CRC Energy Efficiency Scheme (CRC) is an obligatory emissions trading scheme covering non-energy intensive users in both public and private sectors, and is a central part of the UK’s strategy to deliver the emission reduction targets set in the Climate Change Act 2008. All London boroughs will qualify for the scheme, and it is expected that most councils will pay an average of £500,000 in April 2011 and 2012 for fixed cost allowances at £12 per tonne in the introductory phase. After this period the costs are harder to predict due to the introduction of a full cap and trade scheme. However, findings from “trial schemes” indicate this may increase to £18 upwards per tonne.

In addition, the CRC requires a number of obligations to be met, the first of which centres on the need to register for the scheme and to provide information to the Environment Agency in an accurate and timely manner. Failure to do so can result in substantial fines which, in the worst case could amount to over £1,000,000, although the initial fine for failing to register is more typically c.£15,000. The need for accurate and compliant information is therefore essential.

The London Energy Project has successfully delivered its CRC Toolkit and disseminated best practice advice, however many authorities still lack the practical experience necessary to confidently comply with the initial stages, such as registration. In addition, boroughs report there is a real need to ensure that their organisations look beyond the initial compliance requirements and are well prepared to manage their CRC obligations moving forward. This is of particular importance as good consumption forecasting and a trading strategy will be needed to mitigate the risks.

**Stakeholder consultation of London’s energy managers confirmed:**

30% felt confident they had sufficient data to register, 30% felt they could forecast their carbon emissions, 20% believed they had sufficient budget to register and purchase allowances, 50% believed executive teams understood their role within CRC. 90% felt they required the support outlined by LEP in order to comply with and effectively manage the risks and costs of the scheme.

**Borough based independent review, risk assessment and improvement actions.** The principal focus of this project is therefore, to identify and mitigate the risks and costs associated with the initial registration and compliance requirements. Thereafter a CRC Health Check service will be offered to each organisation. This would assesses the organisation’s state of preparedness and review the information planned for submission during their registration with the Environment Agency. A report will be provided to the organisation highlighting any areas of non-compliance, grading their preparations on a ‘red’, ‘amber’, ‘green’ basis, highlighting risks, cost and opportunities and recommending improvement actions, which senior management teams can use for resource allocations.

**Process for collecting baseline information, opportunities assessment and strategy for implementing carbon efficiencies Pan-London.** The CRC Health Check provides Capital Ambition an opportunity to better understand London’s current position in terms of property and asset management, i.e. the energy efficiency measures already implemented and/or planned by organisations, their overall effectiveness and the quantifiable results in terms of both cashable and non-cashable savings. This will allow an assessment of potential opportunities for improved efficiency to be undertaken on a London wide basis. Barriers can be identified, best practice can be shared and, where appropriate we can work with the buying organisations to help specify frameworks to allow for the easier implementation of technologies that have a proven track record.

This part of the project will therefore deliver a report containing the average Energy Performance Certificate (EPC) and Display Energy Certificate (DEC) ratings and their Top 10 recommended improvement actions, current borough activity identified as best practice and measures of success, common themes and opportunities and routes to their implementation, the priority London’s property professionals place on energy efficiency and cashable and carbon benefits. Boroughs waiting to roll-out more innovative projects and planning to benefit from Feed in Tariffs (FIT) and Renewable Heat Incentive (RHI) will be identified.

## 2. Project Information

| No. | Description | |-----|-------------| | 2.1 | **What is the aim of the project?**\
(30 words or less)\
The aim should clearly state the changes you hope to achieve as a result of your work.\
To independently review individual organisation’s CRC preparations, help ensure compliance, mitigate risk and recommend improvements.\
To assess the efficacy of current energy efficiency measures, share best practice and identify Pan-London opportunities. | | 2.2 | **What are the (measurable) objectives of the project?**\
Objectives should clearly outline the activities you will undertake and the services you will offer to deliver the aim. Each objective should be a one sentence statement, or a number of statements starting with the word ‘to’.\
To help boroughs ensure costs, risks and opportunities are effectively managed\
To ensure immediate compliance with the CRC Energy Efficiency Scheme\
To assess and report the preparedness of an organisation and suggest areas of improvement\
To assess and describe the current energy efficiency position Pan-London, analyse energy efficiency measures adopted by organisations to date and to deliver a report to aid the future direction of energy efficiency planning, including savings potentials. | | 2.3 | **How does the proposed project address one (or more) of Capital Ambition’s themes and funding priorities?**\
Capital Ambition themes-Connected London, Delivering Together, Raising the Bar and Developing Capability and priorities set out in CSR 2007, Local Area Agreements, National Indicator 179 and National Improvement and Efficiency Strategy themes of innovation, Empowerment, Economic Renewal and Value for Money.\
Delivering Together:

- The review, risk analysis and mitigation measures will be available for all 33 London boroughs, LFB and Met police
- The common review and risk assessment will recommend common best practice solutions that can be adopted by all, ensuring efficient shared learning and a collaborative approach
- Potential solutions and energy efficiency measures may be shared across all boroughs (dependent of the findings)
- The Pan-London assessment of energy efficiency opportunities will contribute to improvement against NI 185 and N179 (collaborative procurement and VFM)
- An opportunity to consider energy efficiency in a programmed manner across property and estate management, including newer opportunities, such as FITs and RHIs. |

### 2. Project Information

| No. | Description | |-----|-------------| | 2.4 | **What benefits are sought from running this project?**\
Be specific in terms cash savings (what, how much over what period?), efficiency gains (how, impact?), Cost avoidance (what, how much over what period?) and Capacity Building. These headings not exhaustive and additional headings can be added where necessary |

| | Opportunities for effective management of risk circa +/- £10-15 million\
Opportunities to benefit financially from competent management of the CRC scheme\
Risk avoidance / cost – compliance, reputation, challenge from stakeholders | | | - Manage the risks, costs and lost opportunities associated by councils inability to develop and execute a carbon forecasting strategy, incurring greater cost and pan-London liability

- Managing the risks and costs if London Boroughs do not comply with the regulations.
- More efficient use of resources, from assessing risks and opportunities, aiding compliance and costs of non-compliance, accelerating necessary change within borough and identifying Pan-London opportunity.
- A clearer position of energy performance across London’s assets through reviewing EPC and DEC ratings and their recommendations for improved energy efficiency
- More efficient use of resources and carbon reduction through the effective application of AMR.
- Capacity Building – ensuring officers have the necessary tools and process to comply and effectively manage the CRC scheme, integrate energy efficiency with corporate governance, property and estate management. |

We require clear information about projected return on investment for projects that claim to deliver efficiency savings. Please use mietool (or a robust equivalent) to support your savings estimates. If you do not have any mietool trained staff please see the following website for further details [http://www.londoncouncils.gov.uk/capitalambition/resourcesandperformance/bpcasestudies/mietool.htm](http://www.londoncouncils.gov.uk/capitalambition/resourcesandperformance/bpcasestudies/mietool.htm)

| 2.5 | **Are there any partners involved in the project? If so, how will they contribute to its success?**\
Please list names and roles of any partner organisation involved in the delivery of this project. | | | The Environment Agency will provide regulatory support and guidance. |

## 2. Project Information

| No. | Description | |-----|-------------| | 2.6 | **What are the outcomes of the project?**\
When considering intended outcomes, you need to ask the question ‘What changes or effects should come about as a result of the project?’ | | | Each borough will receive a consistent risk-based assessment of its CRC preparation and energy efficiency measures, with recommended improvement actions, i.e. the risks and costs of non-compliance Pan-London will be managed.\
Capital Ambition will receive a clearer picture of the types of energy efficiency measures that have been implemented, the benefits realised by organisations, barriers to implementation and Pan-London opportunities, including collaborative procurement of solutions.\
The review will establish a clearer picture of how energy efficiency measures are integrated into corporate governance, property and asset management.

- London boroughs will have a clearer understanding of their CRC compliance risks through an independent RAG assessment
- London boroughs will receive a report enabling them manage and comply with regulations and avoid the risks of fines associated with the scheme
- Use of resources will be improved through following expert guidance on necessary improvement actions
- Pan-London overview of energy efficiency measures implemented, asset performance and common opportunities for improvement and savings. | | 2.7 | **What outputs will the project deliver and how will you ensure that they are fit for purpose?**\
  Outputs are tangible things (sometimes called ‘deliverables’) that are to be delivered by the project e.g. toolkit, procedure manual, training strategy. | | | 1. A template for assessing compliance with the CRC and the overall preparedness of an organisation

2. A bespoke report for each participating organisation that highlights areas of non-compliance grades their CRC preparation, recommends necessary actions. Individual presentation of this report to each organisation.
3. An assessment of energy efficiency measures implemented across London, a report presenting the findings and recommendations for future Pan-London support or programmes. |

### 2. Project Information

| No. | Description | |-----|-------------| | 2.8 | **What are the key risks (barriers to success) of this project and how will you minimise the impact of them?**\
Key risks should be identified and graded according to likelihood of occurring (Probability) and seriousness (Impact). | | | 1. The principal risk is the failure of boroughs and other stakeholders to participate in an open and willing manner. (Impact medium, probability low).\
2\. Additionally, boroughs may not act on recommendations around compliance or necessary improvement actions. (Impact high, probability low).\
3\. A secondary risk is the failure of the Environment Agency to provide sufficient cooperation when needed. (Impact medium, probability medium)\
These risks can be managed through clear communication and input from senior contacts as necessary. Feedback from other CRC work undertaken by LEP is high and we therefore expect good cooperation. | | 2.9 | **How will the project be resourced?**\
Is the project being conducted within existing operational resources or have specific funds been allocated? Please include internal, external, consultants and/or working groups. | | | External consultancy.\
Project management through LEP.\
Working groups as required (principally, London borough energy and finance managers). | | 2.10 | **What are the project reporting arrangements?**\
As a minimum, a monthly highlight report should be completed and sent to the Capital Ambition Programme Management Office using the Capital Ambition Highlight Report template. | | | The progress of this project will be reported within the main London Energy Project highlight report. | | 2.11 | **How will the success of the project be measured?**\
Each measure should be linked to one or more target outcomes. | | | Number of boroughs using the CRC Health Check service, the number of internal non-compliance issues raised and the number indicated by Environment Agency audit.\
The Pan-London overview of energy efficiency measures undertaken, the benefits realised and the barriers and opportunities Pan-London moving forward. |

### 2. Project Information

| No. | Description | |-----|-------------| | 2.12 | How will you measure the Equalities Impact of the project?\
You should carry out a relevance assessment before submitting this proposal. Any adverse impacts identified should be outlined in the proposal along with mitigating actions. | | | None are anticipated as a result of this project. | | 2.13 | What will be the legacy of the project?\
Please explain how the work undertaken during the running of this project will continue to deliver benefits after project closure. How will the outputs be owned, maintained or updated? | | | Ongoing management of risks and costs associated with CRC scheme participation.\
Potential for common solutions to deliver improved management of risk and continued shared practice.\
Improved relations at borough level with other stakeholders, such as finance and property and estate management due to independent analysis and review of strategy and operations\
A clear overview of the energy performance of London’s asset and a platform of energy efficiency measures that can be implemented Pan-London on an on-going and sustainable basis\
Improved integration of energy measures in property and asset management | | 2.14 | How will lessons learnt be captured and disseminated?\
Capital Ambition requires that you keep a lessons learned log to be shared with others who may run similar projects in the future. | | | The report into Pan-London energy efficiency measures will be disseminated to Capital Ambition Efficiency Board and all boroughs along with its recommendations.\
In addition, information and best practice determined during the completion of this project will be set out and explained during the launch event for the next phase of the CRC Toolkit.\
Any issues, barriers, successes will be communicated as appropriate\
Any common themes identified as part of the independent review of individual boroughs will be flagged as potential areas of support to the Efficiency Board to enable effective management of Pan-London risks and costs |

### Section 3. Key Milestones

Please list the key activities, scheduled start and finish date and who has been assigned responsibility

| No. | Description | Responsible Officer (if known) | Scheduled Start | Scheduled Finish | |-----|-------------|--------------------------------|-----------------|-----------------|

### Section 3. Key Milestones

Please list the key activities, scheduled start and finish date and who has been assigned responsibility

| No. | Description | Responsible Officer (if known) | Scheduled Start | Scheduled Finish | |-----|-----------------------------------------------------------------------------|--------------------------------|-----------------|------------------| | | Achieve funding for project, locally or nationally | | July 2010 | | | | Agreement of scope / outline narratives / deliverables | | July 2010 | | | | Contract Document signoff | <tbc> | <tbc> | | | | Desk top research; questionnaire development, interview design, auditor briefing and drafting of bilateral agreement | June 2010 | 15 July 2010 | | | | Marketing of service availability | June 2010 | 22 June 2010 | | | | Issue questionnaires and carry out telephone interviews | 12 July 2010 | 13 August 2010 | | | | Desktop review, report preparation and client presentations | 12 July 2010 | 31 August 2010 | | | | Health Check service completion | | 31 August 2010 | | | | Assessment of energy efficiency measures data | 12 July 2010 | 31 August 2010 | | | | Report and recommendations about energy efficiency measures | | September 2010 | |

Thank you for completing this proposal. We are happy to receive a copy by email to CA-PMO@londoncouncils.gov.uk.

Please sign and send hard copy to:

Capital Ambition Programme Office\
Capital Ambition\
London Councils\
59½ Southwark Street\
London SE1 0AL Before submission please ensure this proposal has the support of your Chief Executive, and where appropriate Elected Members. **Subject:** Supplier Relationship Development – Benefits Realisation

**Report by:** Christine Morton, Procurement Project Manager

**Email:** christine@mortonatlantic.com

**Agenda item:** 10

**Strategic Theme:** Delivering Together

**Purpose:** To consider the attached progress report on benefits realisation for the Supplier Relationship Development (SRD) project as requested at the Efficiency Board meeting on 20 April 2010.

**Executive summary:** At its meeting on 20 April 2010, the Efficiency Board considered and approved a request for funding for the expansion of the SRD project and asked for an update report on benefits realisation for the work to date.

A report from the SRD Procurement Project manager is appended for consideration.

**Recommendation:** That the Board notes and comments on the attached progress report on benefits realisation for the SRD project.

**Appendices:** Appendix A: Supplier Relationship Development Project - BENEFITS REALISATION REPORT

**Background papers:** None CAPITAL AMBITION

Supplier Relationship Development Project

BENEFITS REALISATION REPORT

Project Host: Mark Atkinson Deputy Head of Procurement and Head of Contracts Management Group London Fire Brigade

Prepared by: Christine Morton Project Manager

Date: July 5th 2010 Supplier Relationship Development Project

Purpose This document reports on

- the progress to date of the London Fire Brigade (LFB) Supplier Relationship Development Project (SRD) (also formerly known as the Strategic Supplier Intelligence and Contract Relationship Management projects),
- the identified benefits
- the level of committed funds.

This project gives opportunities to London local authorities to achieve efficiencies and performance improvements from strategically critical contracts, as well as improving contract management and supplier relationship practices.

Executive Summary

London local authorities spend over £9 billion annually on goods and services. The top 100 suppliers in London account for approximately 25% of this total and the top 1,000 suppliers for nearly 60%. Collectively, London authorities can account for over 70% of the turnover for some of these suppliers and are therefore in a very strong position to ensure the best possible outcomes in terms of efficiency savings, quality, value for money, and innovation.

The Supplier Relationship Development Project has identified outputs that can support London local authorities in achieving these efficiency and best value outcomes by improving the way contractual relationships are managed. In particular, this involves collaborative working to achieve improvements in performance and deliver cashable savings and efficiencies. To date, this includes identification of opportunities such as replacement of Paladin bins, which is expected to deliver £3m per annum savings; common specifications, which is expected to deliver £600K per annum, and use of SRD tools and techniques, which has already delivered £52K in efficiency savings for London Fire Brigade. It forms a strategic part of the restated goals of Capital Ambition under the Future Shape report; namely, it provides support for service delivery improvement, and wider sharing of efficiencies such as common specifications.

Background

The Supplier Relationship Development Project is currently in its fourth phase. The prior three phases included completion of the Status Review of Contract and Relationship Management in London, and the Strategic Supplier Intelligence Project, which discovered that of the £9.3 billion spent annually by London local authorities, the top 100 suppliers accounted for 25% of the spend.

1 Supplier Relationship Development is the process of working with an organisation’s suppliers to achieve cost savings and efficiencies on existing contracts for the mutual benefit of the organisation and its suppliers.

2 www.contractsregister.com

3 The Future Shape Report was presented to the new Capital Ambition Board on 15th June 2010, and reviewed the direction of Capital Ambition programmes and work given the current economic and political climate. A decision was taken as a result by the previous London Centre of Excellence Board to pursue Supplier Relationship Development after the writing and publishing of “You and Your Contractor: A Manual of Best Practice for Contract and Relationship Management Practitioners” and the research into the supplier landscape for London using the Contracts Register Service, the Spend Analysis, and Information Arbitrage (which is specialist analyst information detailing the financial and corporate health, strategic direction and market positioning of selected suppliers). The two projects were then combined to capitalise upon the collaborative power of London local authorities with their existing suppliers so that savings and efficiencies can be made for both local authorities and their suppliers.

In Phase 3, two suppliers of the top 100 suppliers in London were chosen to work together with London local authorities to improve existing contracts for mutual benefit. The suppliers chosen were Veolia, in the waste sector, with an annual spend across London boroughs of £171m; and Care UK, in the social care sector, with an annual spend of £36m. Local authorities currently have contracts with Veolia for waste collection, waste disposal, grounds maintenance, winter maintenance, recycling, and street cleansing. Care UK contracts cover home care, residential and nursing care homes (including PFIs), and foster care.

In April 2010, a bid to extend the scope of the original project was agreed by the Capital Ambition Efficiency Board. The work that is covered under Phase 4 is as follows:

1. **Continued Support for the Veolia and Care UK workstreams**

   The Veolia and Care UK workstreams have been identified and are in the process of being implemented. Assistance is being given to the Collaboration Teams to facilitate implementation and deliver savings and efficiencies.

2. **Consultancy Support to maximise the rollout of the Supplier Relationship Development approach in London to other programmes in the Highways, ICT and Construction sector programmes**

   The Supplier Relationship Development work with Veolia and Care UK has enjoyed a high profile amongst London local authorities. Existing category groupings without an SRD approach have been eager to add SRD to their work, and follow the same processes used in Phase 3. As they have existing stakeholder groups, the existing momentum for seeking savings and efficiencies can be capitalised upon by working with their existing suppliers. Consultancy type support is being given to each programme. This provides a flatter and more effective structure to roll out the benefits of the SRD approach across a wider area in a much shorter amount of time. Ownership of the deliverables and the work rests with each individual category grouping.

   The categories are:

   **Highways**

   - Selected Suppliers - Volker and Conway
   - Project Manager - Dana Skelley, Transport for London
   - Gordon Prangnell, London Borough of Hammersmith and Fulham
   - Chris Tunstall, Transport for London ICT (London Contracts Board) Selected Supplier - Northgate Project Managers - Steven Blantz, London Borough of Camden Tim Kidd, London Borough of Enfield

Construction Selected Suppliers - Kier, Willmott Dixon and Apollo Property Services Project Manager - Julia Vemalls, Capital Ambition

It is worth noting that an early appraisal of contractor rates for Highways spend in London has highlighted a £34 million gap between the highest and lowest rates. There are many reasons for this gap. However, whilst the entire £34 million cannot be simply converted to cashable savings, it is anticipated that significant amount of cashable savings will be achieved via the efficiency workstreams already being offered by the SRD Consultancy Support. These include standardised specifications and performance systems, supplier inputs into leaning cost model options, affordability testing and reviews, etc.

The SRD project provides consultancy support for the three groups to pursue the programme of work below, for all selected suppliers:

- continue collaborative working with London local authorities to finalise SRD strategies for the selected contractors;
- facilitate and support the delivery of a jointly agreed plan of work between local authorities and the suppliers. The objectives of the work plans are focused on quality and service improvements, delivering efficiencies and improving risk management;
- develop the process of supplier intelligence by determining risks for London local authorities in key supply markets such as relative strengths or vulnerabilities, market conditions, financial failure, political, logistical, contingency planning, etc;
- integrating this work with other CA/RIEP projects and the work of the OGC to attain the best results; and
- demonstrate the opportunities for significant improvements in quality and value that can be gained if authorities work collaboratively within the field of supplier relationship development.

The Highways, ICT and Construction groups listed above will be submitting applications to Capital Ambition for project management assistance as and when they are ready (expected July 2010).

There are also other emerging categories that look to be strong candidates to benefit from this approach.

3. Create a Supplier Relationship Development Toolkit for wider use within local and central government

As a result of the progress made with Veolia and Care UK, other local authorities and groups in London and beyond (e.g., Department for Work and Pensions) have approached the SRD Project Team with requests to utilise the same processes for SRD with other suppliers, on a regional and/or sub-regional basis, particularly where there are vast numbers of common suppliers and category management is indicated. It is clear that it is important to develop a SRD Toolkit which will allow other local authorities to run their own Supplier Relationship Development projects using the same tools and techniques developed within Phases 2 and 3. 4. **Pilot Supplier Relationship Development in a Localised Setting**

The Phase 3 work has developed a suite of products (e.g. Efficiency Work Stream identification, mapping and processing, Common Assessment Framework, etc.) that can be used within a more localised context, such as a single client - contractor relationship, in a major contract. The SRD concept is being rolled out within London Fire Brigade (LFB) to identify efficiency and improvement opportunities, and further develop SRD and its potential uses in localised settings rather than a pan London borough environment. LFB have already started using some of the SRD products, and have identified a number of efficiency workstreams. The first workstream is currently being implemented and is providing an efficiency saving of £52k per year. Early indications are positive that SRD products and approaches can be easily adapted to suit single major contractual relationships. This “localised” potential further reinforces the efficiency savings potential of SRD in both local and central government.

**Progress to Date**

The original Supplier Relationship Development project objectives were to:

- support the achievement of cashable and non cashable savings
- deliver improvements in performance and greater efficiencies beyond tactical commodity and services;
- focus resources on areas of greatest longer term potential;
- consolidate and improve on standards of contract management and effective supplier relationships;
- develop the management of supplier relationships at the appropriate level (Borough, regionally or sub-regionally);
- understand optimum trading mechanisms and collaboration formats; and
- embed a more commercial approach to supplier intelligence gathering, its effective use and relationship management.

The goal was to engage suppliers and coordinate engagement across their London local authority customers. The project team’s delivered milestones include:

**Veolia**

- To secure stakeholder engagement, met with all 15 local authorities that use Veolia.
- Developed a Common Assessment Framework (CAF)(^4) to gauge the issues common to all of Veolia’s London local authority customers. An evaluation matrix and accompanying report have also been finalised with the results published to local authorities.

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(^4) The Common Assessment Framework is a survey that gives quantitative and qualitative information as to the state of the relationship between London local authorities and its suppliers. It identifies areas for joint improvement. The version used has been modified to suit from templates provided by the OGC. • Received a “reverse” Common Assessment Framework to understand the issues that Veolia encounters as a supplier to London local authorities and identify areas for improvement.

• Obtained specialist analyst information on Veolia as a publicly traded company, to assess the impact of the recession and to understand the key financial issues facing Veolia.

• Held a workshop for London local authorities to discuss the CAF results, agreed an initial list of areas for collaboration and appointed the collaboration team.

• Held collaboration team meetings, where roles have been agreed and an initial list of topics defined.

• Held joint collaboration team meetings with Veolia, and prioritised two workstreams for initial focus:

- overheads
- bulk bins (replacement of Paladin-style bins)

• Added detail on the workstreams. A workbook template has been developed to manage each workstream and capture initial savings figures (in excess of £3m – see table of expected benefits).

• Agreed a Terms of Reference document.

• Agreed a Press and PR Protocol.

• Drafted a joint newsletter to be issued to all London local authority customers of Veolia.

• Commissioned legal advice.

Care UK

• Met with almost all of the 28 local authorities that use Care UK to secure buy-in.

• Developed a Common Assessment Framework to gauge the issues common to all of Care UK’s London LA customers. An evaluation matrix and accompanying report have been written and distributed, showing good potential for improvement.

• Obtained specialist analyst information on Care UK as a publicly traded company, to assess the impact of the credit crunch and to understand the messages they are sending to their investment community.

• Held a workshop for London local authorities to discuss the CAF results, agreed an initial list of areas for negotiation and appointed a negotiating team.

• Held negotiation team meetings and expanded on the list of areas for negotiation.

• Held a workshop for Care UK internal stakeholders to understand the SRD project, encourage them to run a CAF process on local authority behaviour as customers, and appoint a negotiation team.

• Agreed Terms of Reference

• Agreed Press and PR Protocol to Care UK.

• Held joint negotiation team meetings where workstreams on both sides were brought to the table and agreed. The workstreams prioritised are:

- Determining an agreed quality consensus

- Finding a pan-London approach to staff retention and development

- Business Continuity Planning

- Data Capture, Performance Reporting and KPI standardisation

- Client Contract Assistance

- Document Standardisation

- Re-evaluated negotiation team membership due to tender processes beginning. Some members have had to step back from negotiations to avoid any potential conflicts of interest.

- Received a “reverse” Common Assessment Framework to understand the issues that Care UK encounters as a supplier to London local authorities and identify areas for improvement.

- Commissioned legal advice.

Highways: Volker and Conway

- Held an SRD workshop for London local authorities to start the SRD Highways project, communicate the project plan, and begin work on identifying opportunities.
- To secure stakeholder engagement, met with 4 local authorities that use Volker and/or Conway; as of this writing, more meetings are planned.
- Obtained specialist analyst information on both Volker and Conway as companies, to assess the impact of the recession and to understand the key financial issues facing both.
- Met with Volker to obtain approval to proceed with SRD; the respective Conway meeting was held 2nd July. It is worth noting that should either contractor chosen decline participation in the SRD project, three alternates have been selected to pursue further.

ICT: Northgate

- Obtained specialist analyst information on Northgate as a company, to assess the impact of the recession and to understand the key financial issues facing both.
- Contacted the OGC to tap into their national SRD programme with Northgate, to ensure there is no duplication of work.

Construction: Kier, Willmott Dixon and Apollo Property Services

There has been no progress on construction as the project is awaiting benefits realisation figures before proceeding.

Creation of a Supplier Relationship Development Toolkit

Not yet started.

Supplier Relationship Development in a Localised Setting

The project team has presented to the GLA group in an effort to showcase the work done to date and consider strategies for the way forward. A plan is being produced to run a “reverse” Common Assessment Framework with AssetCo. on how they perceive London Fire Brigade’s customer behaviour. Expected Benefits

While it is difficult to calculate in financial terms the expected benefit of some of the workstreams, others are being progressed. As of this writing, the expected benefits of the bulk bin workstream with Veolia are in excess of £3m if applied across all of London’s waste collection contracts, not just the ones held with Veolia. All figures are best estimates and are subject to take-up.

| Supplier | Workstream | Description | Expected Benefit (if all London take-up) | |----------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------| | Veolia | Bulk Bins | Replacing bulk bins for multi-residence properties would result in cost savings in vehicle standardisation as well as reducing health and safety risks for old-style bins. The older, less efficient style is a paladin bin. These are the old, cylindrical metal bins. They need a specific lift on the back of the collection vehicle, are difficult to move, and ugly. The modern replacement is either a 940 litre or 1100 litre wheeled bin. These have affixed lids, are easier to move, and fit standard bin lifts. | £3,051,775 (cashable and non-cashable) and 527,880 kg CO2 reduction in emissions Per Annum (Please note to implement this workstream there is a capital cost for the new bins, and funding sources, such as grants or invest-to-save, are being investigated). | | Super Depots and Joint Working | It must be accepted that each LA Contract has its individual constraints; pricing units, reporting systems, defaults, targets, staffing levels, inflationary increases, emergency works, disposal costs and the like, vary dramatically. However, within this complex framework, efficiencies are still available. At present, Veolia operate one depot for each Contract; many administrative functions are duplicated. Supervision, accounts, management information could be rationalised. | Financial benefits to be calculated. | | Shared Management Information | The information required by councils is relatively constrained by BVPIs, WasteDataFlow and LATS. Sharing and cross-referencing the reporting and invoicing requirements across differing Contracts may identify efficiencies. | Improved availability of benchmarking information. | | Shared Management | Veolia are well placed to explore the variances among contracts, | Improved sharing of best practice. | | Supplier | Workstream | Description | Expected Benefit (if all London take-up) | |----------|------------|-------------|------------------------------------------| | Expertise | and to demonstrate the potential for savings. If systems, information provision and the backing evidence for invoicing can be homogenised, savings would be generated. More efficient payment systems mean better cash-flow, and also provide the information to react more quickly and coherently to common problems (snow, industrial action, depot fires, etc). | | | | Specification Changes | Councils need to take on board the option that shared depots, adjusting specifications, revising invoicing methods and sharing resources may generate efficiencies. This would require an open-minded approach to joint working. | £200K per specification per authority; reduced legal costs. If three local authority tender processes are run per annum, there is a savings of £600K p.a. | | | Cash Flow | Councils have the opportunity to pay bills faster which may help Veolia from a cash flow perspective. eBilling may also be an option. | Reduced billing errors, and reduced invoice processing costs. At a minimum, one third of a post saving for each contract equates to £12k per contract per borough. | | | Central Government Guidance | Guidance issued from central government does not always take into account operational experiences. For example, recent recommendations in the new WRAP guidance promote kerbside sorting when in reality it is not operationally sound. There is a role for local authorities to play to communicate such experiences to central government and thus assist themselves and suppliers in delivering services. | Improved guidance issued from central government to spread best practice. | | | Performance Monitoring | Both Veolia and local authorities are doing the same job of monitoring performance. There could be a better way to use technology in this area. Veolia’s biggest expenditure in that area is interfacing, as the typical | Improved benchmarking and performance monitoring; reduced monitoring costs (financial benefits yet to be | | Supplier | Workstream | Description | Expected Benefit (if all London take-up) | |----------|------------|-------------|------------------------------------------| | Care UK | Quality Consensus | Generically speaking, there is no agreed consensus as to the quality of services provided by Care UK to their clients (other than CSCI ratings). It would be helpful if both parties agreed to use, for example, a client advocate group, to agree the benchmark for quality and work towards improvements based on that baseline. | Agreed quality measurements to enable improved benchmarking and provide clarity to stakeholders. | | Business Continuity Planning | | There is no business continuity plan that covers all of London; plans may exist to cover a particular borough, but not across the boundaries. | Improved ability to respond to potential disruptions in service provision. | | Client Contract Assistance | | Under the scope of the Personalisation Agenda, the ultimate customer of suppliers will be the client and their families. Clients and their families may not be in a position to create contracts that will serve their best interests with suppliers. A standardised template that can be flexible to adapt to individual clients' needs would assist. | Consistency in provision to clients, clarity to providers, and reduced legal costs from a consistent approach. | | Joint Monitoring | | Local authorities currently monitor the same home multiple times over if they have placements there, causing home management to be inspected multiple times. | Reduced monitoring costs (financial benefit to be calculated). | | Pan London Approach to Staff Development and Retention | | A pan-London approach to staff development and staff retention is needed. | Consistent training methods related to KPIs and agreed quality standards. | Further detail on the benefits methodology used is available for inspection, and some capital outlays will be involved; however, there are options for grant funding and/or increased fees. All calculations are approximate. Other workstreams have been identified for a second tranche of delivery.

For the suppliers that have recently joined the programme in Highways, ICT and Construction, workstreams have not yet been agreed as negotiation teams have not yet been named. However, from the initial meetings it is clear that there are efficiencies to be gained in areas including common specifications, monitoring and others.

The value of the toolkit, once delivered, is expected to be at £25K per borough. This is the expected cost of educating that borough and developing tools and techniques for the SRD process via consultancy. Without a base knowledge of the mechanics of Supplier Relationship Development, further projects would be limited in their chances of success.

**Level of Committed Funds**

The bid in April 2010 agreed funding of £215,000 for the project extension through May 2011. £115,856 was unspent for the period to 31st March 2010, and was agreed to be carried over to the 2010/11 fiscal year.

## Capital Ambition Shared Services and Joint Procurement Board

### 2010/11 Forward Plan

**Standing Items:**

- Apologies; Minutes; Progress and Budget update for Efficiency Related Projects; Current issues and AOB

| Item | Purpose of Item | Funding Request £ | Savings Forecast £ | PM or Item Contact | Comments/ PMO Next Steps | Action Due Date | |------|-----------------|-------------------|--------------------|--------------------|--------------------------|-----------------| | **7 September 2010** | | | | | | | | JIP: Complex Aids to Daily Living | Potential request for funding to implement service change across London | 250,000 | 10,000,000 | Julia Vernalls | Pending development of options appraisal funded by JIP/DoH | | | Property & Asset Management | Tentative-To take forward the recommendations from the EC Harris report on Property and Asset Management | TBC | 0 | Julia Vernalls | Meeting with ECH 13 July 2010 | | | Pan London Libraries Programme | Request for funding | TBC | | Caroline Stanger | | | | Debt recovery hub and one stop income and assessment service (Croydon) | PID | 74,000 | 0 | Caroline Stanger | With Croydon to respond to CS comments of 23 June 2010 | | | One Stop Income & Service Assessment Tool (Croydon) | PID | 95,000 | 0 | Caroline Stanger | With Croydon to respond to CS comments of 23 June 2010 | | | Promoting Independence and Social Inclusion for Adults with Mental Health Problems (Croydon) | EOI | 407,000 | 5,000,000 (by year 5) | Julia Vernalls | With JIP for comment 5 July 2010 | | | SRD: ICT - Northgate | Funding for Project Manager | 40,000 | 0 | Ken Cole | Ken Cole/slipped from 12 July meeting | | | SRD: Construction | Funding for Project Manager | 40,000 | 0 | Julia Vernalls | Julia Vernalls/ slipped from 12 July meeting | | | Agency Staff and Consultancy Spend | Possible proposal for actions to address current spend. | TBC | TBC | Sally Reynolds | Paper being developed for Dir of CA | |